Restaking has recently taken Ethereum by storm, at a time when there otherwise wasn’t much of a narrative for the chain, which was seen by some as nearly a laggard compared to the likes of $SOL and $BTC late last year. EigenLayer has accomplished a couple of things; A. provided a DA alternative for chains to use, and, perhaps more importantly, B. expanded the gamification of points and stacked yield to Ethereum mainnet. It is clear that there is definitely still some innovative use cases being developed on Ethereum mainnet, and certainly not all mindshare has moved to L2s.
Nonetheless, Ethereum mainnet remains expensive, even if relatively cheap to use compared to periods in the past. Some people are eating gas costs to accumulate points as well as enhanced yield on their $ETH and LSTs. Mantle has also stated that they would share 100,000 $ETH worth of restaking points with $mETH holders on the Mantle chain, in addition to another unannounced reward of some sort. This is potentially one way to accumulate EigenLayer restaking points on L2 without having to deal with gas fees. Users can also access the $weETH LRT on Arbitrum, recently launched by Pendle in conjunction with Ether.fi. This is a more direct way to accumulate points over time at a boosted rate via the Pendle YT (yield token).
In this edition, we’ll be briefing you on a couple of other restaking options soon to launch, though they are not on Ethereum at all but rather Solana and Cosmos…
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Solana Restaking (Picasso)
The popularity of Solana can’t be ignored; even acknowledging its latest outage and recent network congestion, there are not very many users who are ceasing to use the chain or opting to use Ethereum L2s. Perhaps the Ethereum Dencun upgrade can help to sway some users towards L2s, but this is not that likely. Solana users certainly don’t want to pay Ethereum gas fees. Fortunately, to access restaking they don’t have to; Picasso Network, by Composable Finance, is providing a restaking solution for the chain.
Restaking on Solana makes sense for users on the demand side; there are several LST options on the chain, including $LST by Marginfi, $bSOL by SolBlaze, $JitoSOL, and $mSOL by Marinade Finance, primarily. These LSTs make up a huge swatch of the TVL on popular lending platforms like Marginfi and Kamino despite minimal APRs due to points farming.
Back to Picasso: Picasso is an L1 blockchain on Cosmos, operating as an interoperability layer. The native $PICA token has noticeably up some 2,000% since its inception in late August. The coin sits at a ~$38M marketcap, down 70% from its ATH achieved one month ago. Picasso is backed by the Composable Finance foundation, which primarily focus on Picasso and it’s abilities, in addition to the Trustless DEX on polkadot. This DEX can be accessed on Composable Finance’s Ethereum IBC testnet, which might be interesting to some.
How does Picasso’s restaking solution work? Similar to EigenLayer, it will accept both native restaking of $SOL as well as restaking of LSTs. There is a unique value add behind Picasso, and that is the fact that its restaking is integrated with IBC. It’s platform will allow for the introduction of Cosmos and Polkadot assets (IBC assets in general) to Solana. These efforts are apart of the MANTIS app iniative (Multichain Agnostic Normalized Trust-minimized Intent Settlement).
Picasso also allows for the staking of $SOL, $mSOL, $jitoSOL, $bSOL, as well as Orca LP tokens to it’s Solana / IBC-integrated validators. When it comes to restaking, the accepted assets are $SOL, $jitoSOL, $bSOL, $msOL and now, $LST.
The protocol is currently undergoing its guarded launch to prioritize the security of this new endeavor. Like EigenLayer, the restaking caps are expected to be increased in subsequent increments, with the end goal being an uncapped protocol. The current cap is 150k $SOL, with the next being 500k. The protocol’s MANTIS games are underway, an incentive to promote restaking.
The restaking vault is notably operated by a 7-of-9 multisig, primarily made up of Picasso team members as well as advisors, community members, validator operators, and the SolBlaze protocol. Restaking vaults are currently live, though the Solana IBC connection that they are proposed to be used for is not. When this happens, the vault contents will be delegated to the Solana IBC validators.
The Picasso restaking vaults have some ~$11M in TVL between all assets, sitting at a 63% utilization rate of the current 150k cap. This may increase, as the current restaking APR is 15%, notably more than anything available on top protocols for single-sided $SOL derivative deposits. There is also 17.5 $PICA (~$147k) and 2M $BLZE (~$6k) allocated for rewards.
Cosmos Restaking (Persistence)
Liquidity and innovative ideas both flow to chains where they will be best received. The Cosmos ecosystem has been getting more attention recently, with appchains and airdrops at the forefront. As such, it makes sense that Persistence, a leading liquid staking protocol on the network, is expanding its offerings from simply staking to also include restaking. This is in addition to their DEXTER DeFi application, which is an interchain DEX for yield-bearing assets.
Restaking in Cosmos works much the same way as it does on Ethereum; LSTs can be staked yet again to provide additional security for other services. This is fitting given that the core thesis behind Cosmos is the ability to create sovereign chains, so infrastructure that makes providing security for said chains would be right at home here. Restaking is not to be confused with $ATOM shared security, dubbed ‘Interchain Security’. This is a use case created for the $ATOM token and chain validators to provide security for ‘consumer chains’, which is distinct from restaking, although a somewhat similar concept perhaps.
Anyways, what will restaking look like on Persistence? Similar to the EigenLayer UI, Persistence will grant users the ability to deposit LSTs from multiple providers, which include pSTAKE (Persistence’s own LST protocol), Milkyway, Stride, and Quicksilver. Where Cosmos restaking differs from Ethereum is that multiple assets can be restaked, including $dYdX, $ATOM, $TIA, and even more.
The Cosmos ecosystem already boasts very high bonding rates, with nearly 67% of the $ATOM coin currently being staked. When this threshold is hit, $ATOM inflation will actually significantly decrease. Restaking in this manner could potentially increase the risk of slashing. The benefit of being able to incorporate multiple assets into LRTfi on Cosmos comes with some amount of increased risk vs simplifying allowing Ethereum, as is the case on EigenLayer. Measures are already in place which plan for this risk. The Terra Alliance Module is used, which restricts slashed funds to the specific validator who misbehaved rather than the total amount of tokens. These tokens are redistributed to behaving validators.
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