The Re-staking Market Welcomes New Opportunities: Analyzing Popular Projects and Potential Risks

The Revival of the Ethereum Ecosystem

With the approval of the Bitcoin spot ETF, Ethereum has also received good news. The market's expectations for the Ethereum spot ETF and the upcoming Cancun upgrade have injected new vitality into Ethereum. This series of developments has led to a continuous increase in Ethereum's stake, while also driving the demand for re-staking.

EigenLayer, as a pioneer in the re-staking field, allows users to re-stake ETH, liquid-staked ETH, and related LP tokens into other services such as sidechains, oracles, and middleware. This innovation not only enables third-party projects to benefit from the security of the Ethereum mainnet but also provides additional revenue sources for ETH stakers, achieving a win-win situation.

In just one month, EigenLayer has attracted over 500,000 ETH in stake, with a total locked value (TVL) exceeding $1.6 billion, rising to become the 12th top protocol in the Ethereum ecosystem. Recently, EigenLayer also announced the provision of re-staking services for Cosmos subchains, a move that has significant implications for both the Ethereum and Cosmos ecosystems.

Potential Projects in the Re-staking Field

The re-staking market is not limited to EigenLayer, but also includes multiple derivative projects. These projects can be roughly divided into four categories:

1. LSD Staking: Deposit liquid staking tokens (such as stETH, cbETH) into EigenLayer for restaking.
2. Liquid LSD Re-staking: By using protocols like Kelp DAO, LST is entrusted to the protocol for deposit into EigenLayer for re-staking, and users receive liquid re-staking tokens (LRT).
3. Native re-staking: Validators directly use the EigenPod smart contract to redirect the validator withdrawal receipts to EigenLayer.
4. Liquidity Native Re-staking: Projects like etherf.fi or Puffer Finance that provide small ETH node services will re-stake the ETH in the node to EigenLayer.

Here are five noteworthy unreleased token staking projects:

Kelp DAO

The re-staking project developed by the multi-chain LSD project Stader Lab belongs to the liquidity LSD re-staking type. Currently, it supports deposits of Lido's stETH and Stader's ETHx.

Swell

The established LSD protocol recently announced its entry into the liquidity re-staking field, which belongs to the liquidity-native re-staking type. Users can deposit ETH to exchange for rswETH, without being subject to EigenLayer LST quota restrictions.

ether.fi

It belongs to the liquidity native re-staking type and achieves ETH staking through a decentralized, non-custodial method. Its collateral voucher token eETH (wrapped token weETH) is currently one of the few liquid LRT tokens.

Renzo

Similarly belonging to the liquidity-native re-staking type, it is not subject to the EigenLayer LST deposit limit. It should be noted that the ETH currently deposited does not support redemption, and its staking certificate ezETH cannot be transferred.

Puffer Finance

A liquid staking protocol that is anti-penalty and similar to ether.fi, belonging to the liquidity-native re-staking type. Its characteristic is to lower the 32 ETH node threshold of EigenLayer to below 2 ETH, aiming to attract small node participation.

Alternative Strategies for Participating in Re-Staking with Pendle

Pendle, as a decentralized interest rate trading market, provides another avenue for participating in re-staking. By purchasing YT-eETH in Pendle, investors can simultaneously earn staking rewards, ether.fi double points, EigenLayer points, and Pendle's trading rewards. However, this strategy essentially exchanges time for staking rewards and points, requiring a thorough understanding of the YT pricing mechanism before proceeding.

Potential Risks of Re-Staking

Although re-staking provides more opportunities for stakers, it also brings a series of potential risks:

1. Fine risk: Malicious activities may lead to the confiscation of staked ETH.
2. Centralized Risk: An excessive number of stakers moving to a single protocol could pose systemic risks to Ethereum.
3. Contract Risk: The smart contracts of various protocols may have vulnerabilities.
4. Multi-layered risk accumulation: Re-staking combines the existing staking risks with additional risks, resulting in a more complex risk structure.

Conclusion

With the revival of the Ethereum ecosystem, the re-staking market is welcoming new opportunities. The Cancun upgrade will directly benefit the L2 sector, while EigenLayer's re-staking ecosystem will also become the focus of market attention. Participating in the projects mentioned in this article may be a cost-effective choice at present, but investors need to be aware that the continuously nested re-staking essentially creates speculative leverage for liquidity, which brings higher returns while also amplifying risks. Therefore, when participating in any re-staking activities, one should fully assess potential risks and make informed decisions based on their own risk tolerance.