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Recently, Pencils Protocol, which has ushered in a new brand upgrade, has become the hottest project in the Scroll ecosystem. In Season 2, the ETH stake of Pencils Protocol exceeded 1,100, the TVL exceeded 3.5 million US dollars, and attracted tens of thousands of users to participate. At the same time, it has also received high attention and favor from many well-known investment institutions including Scroll Co-founder Sandy, Animoca, Gate, Presto Labs, Galxe, OKX Ventures, and financing, which has also made Pencils the top protocol in the Scroll ecosystem.
Focusing on the Pencils Protocol itself, its ecological functions have also undergone a series of upgrades after the brand upgrade. It has been further expanded from the initial LaunchPad platform to a comprehensive ecosystem integrating LaunchPad, Staking, Vault and other functions, and is expected to expand into RWA and other fields in the future.
Of course, as a comprehensive on-chain ecosystem, Pencils Protocol is not only an aggregated income platform, but its narrative direction also includes the LRT track. Through integration with other on-chain protocols and a combination of a series of functions, it is building a new paradigm of LRT ecology.
What are the advantages of Pencils Protocl's LRT system?
In addition to the LaunchPad function, the new brand Pencils Protocol has also launched Staking and Vault sections. The Staking section supports users to pledge assets into the pool and obtain staking income. The assets pledged by users will be used as the bottom pool for leveraged mining in the Vault section. The Vault section is an entrance to liquidity mining (connected to some third-party DEX liquidity pools), which supports users to conduct LP mining in this section. However, the difference from other liquidity mining methods is that the Vault section supports leveraged mining, that is, it supports users to borrow more assets from the Vault pool for mining to obtain higher LP returns. Users only need to pay the interest on the borrowed assets (according to the elasticity of the liquidity of the asset pool, and as the staking income of Staking users), and there is basically no liquidation risk.
This system is a good liquidity mechanism. Any DEX connected to the Pencils Protocol or some supported assets can get good liquidity support.
Currently, the Staking section of Pencils Protocol is also planning to expand deeply into the LRT field to provide users with more abundant income options.
In fact, from the perspective of the LRT track itself, it can provide higher multi-layer returns than LSD. Usually, some LRT protocols will pledge the user's ETH or LST assets to EigenLayer and provide the user with an LRT re-pledge certificate asset, and the user will receive multiple returns, usually including the pledge income of the Ethereum main network + the node reward of the re-pledged AVS service + the token reward income of the LST platform + the points or token rewards of EigenLayer + the token or point rewards of the LRT platform. At present, some major LRT protocols include Renzo, Ether.fi, Kelp DAO, EigenPie, YieldNest, Swell, Pendle Finance, etc.
Although the returns that the LRT protocol can provide to users seem very high, in fact, there is still some gap compared with the returns of the Pencils Protocol's staking system.
Let’s take the already launched Season 3 event as an example.
In the Pencils Protocol event, users can stake through its cooperative LSD protocol.
During the event, users can choose to stake ETH through Puffer or StakingStone, and then stake the obtained LST assets pufETH or Stone to Pencils Protocol staking. The potential benefits of users include:
The staking income of staking pufETH or Stone will not be less than the sum of the staking income of the Ethereum mainnet + the node reward of re-staking the AVS service.
From the point of view of points, if the user stakes pufETH, he can get Eigenlayer Points and twice Puffer Points (need to stake pufETH). If the user stakes $Stone, he will get three times StakeStone W1 Points (need to stake $Stone, enjoy 3x Points in the first 10 days of the event, and enjoy 2x Points after 10 days)
In addition to these points, other points that users will receive include Pencils points rewards, Scroll Points (Marks) provided by Scroll, and the S3 Ecological Alliance Airdrop (all users participating in S3 Staking will be 100% eligible for Pencils Protocol Genesis airdrops. In addition, partners will continuously provide airdrop activity incentives to the Staking pool, and users can flexibly extract multiple tokens from the Staking pool as additional airdrop income.)
To sum up: considerable Staking income + Eigenlayer Points + multiple LSD points rewards + Pencils points rewards + Scroll Points (Marks) + Ecological Alliance airdrop.
Of course, if users also stake some ETH through the Pencils Protocol, they can also enjoy an ultra-high staking income of 25% APR (provided by the Scroll Foundation), as well as doubled Pencils points rewards + Scroll Points (Marks) + Ecological Alliance airdrop rewards.
So on the whole, the LRT income of Pencils Protocol will be much higher and richer than some existing LRT protocols.
Season 3 of Pencils Protocol has been launched on May 20th, and you can start enjoying seamless diversified benefits.