Restaking has clearly caught the DeFi world by storm. Between Restaking, EIP-4844, and speculation around an ETH ETF, a bullish trifecta of sorts may be in play for ETH and associated assets. ETH recently has managed to maintain its position above the $4k price point.
Amidst a period in time where more mindshare is leaving Ethereum mainnet for L2s or even other chains outside of the EVM, restaking is one of the last few innovations in the industry that is still primarily found on ETH. While restakingg is cropping up on other chains like Cosmos via Persistence, Solana via Picasso Finance, and NEAR via Octopus Network, to name a few, the bulk of TVL belongs to ETH LRTs. In this edition, we’ll be briefing you on 4 of the biggest names in the game when it comes to Restaking; Ether.fi, Inception, Kelp DAO, and Swell Network.
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Ether.fi
Ether.fi is a liquid staking protocol that offers staking rewards, ether.fi points, and EigenLayer points as incentives. Ether.fi natively stakes ETH on the beacon chain, differentiating it from other staking methods.The protocol maintains composability for users in various DeFi protocols to ingetrate its LRT. This includes availability of the protocol’s LST, eETH, on Arbitrum, which provides optionality for fee-sensitive users. Users can also accumulate eETH points on Pendle. Whales Market currently allows users to buy and sell points allocations on Ether.fi, with $600k+ in volume being facilitate by the platform.
Ether.fi has another incentive mechanism which ends in 3 days, rewarding collective participation in the protocol. This strategy has been employed by multiple LST/LRT protocols to reward total TVL growth.
It was also announced that Ether.fi committed $600M in staked ETH to help secure the Omni Network, a blockchain aiming to unite all rollups. Ether.fi is notably the leader in the restaking sector, holding over $2B in TVL, according to DefiLlama.
Kelp DAO
Kelp is an LRT solution, providing rsETH, on EigenLayer for Ethereum. Kelp takes focus on security as well as providing comprehensive liquid staking solutions.
The protocol’s Co-Founders include both Amitej Gajjala and Dheeraj Borra;these two previously co-founded the Stader Labs Liquid Stkaing solution. Amitiews restaking as a blue ocean and focuses on customer needs rather than competitor activities. He mentions their protocol’s emphasis on security across smart contracts, non-custodial practices, and AVS security assessment. The team also prioritizes solving customer problems and offering rewards as well as DeFi opportunities.
Kelp recognizes restaking rewards as a very important piece of the LRT puzzle. This is evident in the introduction of $KEP, which is a token representation of EigenLayer points. This is a way to merge the offerings of both the native LRT rewards as well as the base EigenLayer restaking rewards under the one roof of Kelp.
Boosted Kelp Miles Accumulation for KEP LPs
When it comes to managing the risks of restaking, Kelp sees long term risk management as crucial. Currently, the implementation of slashing on EigenLayer has been delayed, but this will not remain the case. The team anticipates the emergence of insurance models to increase trust and mitigate slashing risks, highlighting plans for DAO-based governance and community involvement in decision-making processes. Kelp will also self limit their protocol ownership share of stETH to no more than 22%, highlighting that market forces should determine size rather than artificial limits. This explicit figure comes after talks with the Lido team.
Kelp also recently announced that they would be delegating $300M of their staked ETH to Omni Network.
Swell Network
Swell Network is a permissionless, non-custodial, and liquid ETH Staking protocol that is built for stakers, node operators, and the Ethereum ecosystem at large. The protocol originated in the LST space (swETH), and has since evolved to include LRTs (rswETH). Swell’s unique approach includes integrating LST and LRT in their offerings to make their platform as user-friendly as possible, focusing on building a complete stack for the consumer.
Before the introduction of Points to the DeFi ecosystem at large, Swell provided it’s own offchain rewards computation for wallets holding its swETH LST, dubbed ‘Pearls’. These Pearls will be redeemable for the native SWELL token at TGE. Swell is backed by some notable investors in a round led by Framework Ventures, also featuring Mark Cuban, Kain Warwick of Synthetix, Maven11, and more.
Swell, along with other LRT protocols, has provided staked ETH liquidity to help secure Omni network. Swell Network has upcoming DeFi integrations and L2 developments, one of which includes Swell Network potentially providing staking options for tokens like Chainlink’s LINK, AltLayer’s ALT, among others, as teased in the tweet below.
Inception
Inception is an isolated Liquid Restaking (iLRT) protocol for Liquid Staking Tokens (LSTs), enabling the restaking of various LSTs with the initial focus on stETH and rETH. The protocol specifically allows 12 LSTs to be restaked on EigenLayer through their platform. Inception highlights the importance of isolated risk and predictability for users. Isolated LRTs will be crucial for maintaining competitiveness in the liquid restaking wave. This is a competitive advantage that could help to separate Inception from the pack.
The Inception team sees substantial potential for EigenLayer infrastructure, believing it could surpass all Ethereum L2s due to its modular risk exposure. There is also a lack of institutional adoption so far, hinting at broader acceptance and the possibility of including $BTC and more on Ethereum as restakable assets, which could diversify capital beyond Ethereum-centric assets. The team hints at a future where $BTC LSTs might be integrated.
When it comes to risk, the team recognizes the importance of the importance of withdrawals, additional audits for evolving protocols, and strategies to mitigate slashing risks through partnerships and insurance solutions. To minimize slashing risks, they plan to select professional node operators for DVT deployment. Slashing won’t be activated on EigenLayer immediately, giving the market time to adapt. There is the potential for both on-chain and off-chain insurance solutions to mitigate risks. It’s prudent for users to be informed about these risks in a permissionless DeFi environment.
Upcoming plans for Inception include implementing the launch of a flash and stake feature aimed at enhancing capital efficiency for secondary market liquidity. This feature, set to be available in two to three weeks, will be integrated into their LRT system and facilitate omni-chain functionality.
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