Re-staking is expanding beyond Ethereum.
Re-Staking derived from liquidity staking maintains more security for Ethereum and seeks more returns for investments. Today, the track has gradually evolved from Liquidity Collateralized Tokens (LST) to a matryoshka version - Liquidity Re-collateralized Tokens (LRT).
In principle, LRT is actually similar to a rehypothecation certificate. Exchange ETH for LST through liquidity staking. LST is a re-pledge certificate that proves I did pledge ETH. Exchange LST for a new re-pledge certificate through re-pledge, which is used to prove I did pledge LST again. ”, but from beginning to end, the original asset is only ETH itself.
To put it simply, you pledge ETH to get LST, pledge LST for the second time to get LRT, and keep repeating the nesting doll, which is called re-staking. You can use LRT to do more financial operations, such as re-pledge and borrowing, etc. Every time you pledge, there is an extra layer of opportunities to use liquidity to gain income.
Recently, some tokens related to the LRT concept have experienced good growth. In addition to Restake Finance ($RSTK), which is constantly doubling, there are also projects with issued coins but low market capitalization, such as the LRT solution built with rsETH based on EigenLayer. Solution KelpDAO.
Unreleased currency projects include Swell, ether.fi, Renzo, Puffer Finance, which raised $5.5 million, exocore, which focuses on multi-chain restaking, and even lending platforms Ion Protocol and Astrid that serve Staked and Restked assets.
Related Reading:RSTK doubles in one day, take a look at the Restaking track ecological project》
Although the most common way to re-pledge is to re-pledge the LST obtained by pledging Ethereum into EigenLayer to obtain LRT, other ecosystems are also attacking the re-pledge track, such as the Bitcoin staking protocol Babylon, Solana ecosystem Picasso, etc. This article will review re-pledge projects outside of Ethereum.
Babylon
On December 7, Bitcoin staking protocol Babylon completed US$18 million in financing. This round of financing was led by Polychain Capital and Hack VC, with participation from Framework Ventures, ABCDE Capital, IOSG Ventures, Polygon Ventures and OKX Ventures.
Babylon stakes Bitcoin as an economic security token for use on a blockchain using a proof-of-stake consensus mechanism. Typically, proof-of-stake chains use their native token for staking, such as the Ethereum network using ETH for security, which can compromise security on chains where the native token is unpopular. Babylon’s proof-of-stake service uses Bitcoin for purposes other than as a store of value.
Babylon entered the testnet in January this year and has currently integrated 39 chains on its testnet, and will soon launch scalable restaking.
Babylon is the leading project of the Bitcoin ecosystem and the largest staking infrastructure for Bitcoin. Babylon originated from a research paper on the security of Bitcoin, which was an original scientific research result co-authored by co-founders David Tse, Fisher Yu, EigenLayer founder Sreeram Kannan, and other co-authors.
Babylons Bitcoin staking protocol adopts a remote staking method and overcomes the lack of smart contracts through cryptography, consensus protocol innovation and optimized use of the Bitcoin scripting language. Babylons staking protocol allows Bitcoin holders to credibly stake Bitcoin without bridging to the PoS chain, and provides the chain with complete slashable security guarantees, eliminating the need to bridge pledged Bitcoins , packaging and hosting requirements.
A key aspect of Babylon is its BTC timestamping protocol. It timestamps events from other blockchains onto Bitcoin, allowing those events to enjoy Bitcoin timestamps just like Bitcoin transactions. This effectively borrows the security of Bitcoin as a timestamp server. The BTC timestamp protocol enables rapid equity unbundling, composable trust, and reduced security costs to maximize the liquidity of Bitcoin holders. The protocol is designed as a modular plug-in that can be used on a variety of different PoS consensus algorithms and provides a basis on which the reset protocol can be built.
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As a Bitcoin ecological project, Babylon will expand an ecological world centered on Bitcoin, unlock the income value of 21 million Bitcoins, and extend the security of Bitcoin to protect more POS decentralized worlds. Due to re-collateralization, Bitcoin will become more than just hard currency and will become a productive asset.
Currently, the first phase of staking has ended, and interested users can continue to pay attention to the updates of the second phase. Babylon hopes to launch the mainnet before Bitcoin’s “halving”. The deployment of the mainnet depends largely on the security audit results of the Babylon testnet.
LiNEAR
LiNEAR is a liquidity staking protocol on Near Protocol. The NEAR mainnet was launched in August 2020 and is a sharded, proof-of-stake L1. Central to its design is the concept of sharding, a process that divides the networks infrastructure into parts so that nodes only need to process a small portion of the networks transactions.
The key advantage of LiNEAR is its ability to automatically monitor and adjust validator delegation to ensure that the overall rate of return is competitive and stable. The current annualized rate is 8.35%, which is the highest in Near.
The re-pledge method of LiNEAR involves three tokens: $NEAR, $LiNEAR and $bLiNEAR. In order to allow users to fully participate in LiNEARs decision-making and influence its development, LiNEAR is launching the LiNEAR protocols governance token $LNR.
Users can obtain $LiNEAR by staking $NEAR, which can be further used in various DeFi protocols in the NEAR/Aurora ecosystem, significantly improving the capital efficiency of $NEAR pledgers. $bLiNEAR is a liquid re-pledge derivative token launched by LiNEAR. After users deposit $NEAR into the $bLiNEAR pledge pool, they will receive $bLiNEAR, which represents the users re-pledge of $NEAR.
$bLiNEAR can be used in any DeFi protocol for additional financial activities, such as re-hypothecation, lending or providing liquidity. A significant advantage of $bLiNEAR is that it can be quickly redeemed back to $NEAR, avoiding the typical lengthy unbonding and delayed unstaking period.
As the protocols governance token, users can deposit $LNR into the insurance fund, and pledgers receive $sLNR as a representation of their fund shares. $sLNR holders have the power to set rates for the $LiNEAR and $bLiNEAR staking pools, manage delegation strategies and oversee the protocol treasury, and are able to earn a share of the protocol’s protocol revenue, which grows as the ecosystem grows. New $LNR tokens will be regularly introduced into the insurance fund, promoting $bLiNEAR-related liquidity and enhancing governance.
Currently, LiNEAR is preparing a $LNR airdrop campaign for existing $LiNEAR users and early $bLiNEAR adopters. Users can lock $NEAR before a specific date and enjoy the staking income of the LiNEAR protocol before expiration, and will automatically receive $bLiNEAR after expiration. The earlier you lock up before expiration, the larger the $LNR airdrop amount will be.
Related Reading:LiNEAR protocol launches governance token $LNR and launches re-staking support》
In addition to LiNEAR, the re-staking project for Near Protocol also includes Octopus Network.
On December 17, Octopus Network launched the first Cosmos SDK application chain Ottochain, which means that its innovative NEAR Restaking shared security service and NEAR-IBC cross-chain service are running stably, and the Octopus 2.0 mainnet is officially launched. It is reported that Octopus 2.0 has added a NEAR Restaking mechanism.
In Octopus 2.0, $NEAR holders can re-stake their tokens to the NEAR protocol, or to Ottochain and more application chains. Therefore, in addition to receiving staking rewards of $NEAR, you can also receive additional rewards of $OCT distributed by Ottochain by re-staking. But unlike LiNEAR, staking NEAR to Octopus cannot provide LRT, that is, the pledged NEAR cannot be further used in DeFi.
Picasso
Picasso Network is designed to support multiple L1s, primarily facilitating inter-ecosystem blockchain communication (IBC) among ecosystems such as Polkadot, Kusama, and Cosmos, and extending to other networks such as Ethereum and Solana. However, the project is currently targeting the gap in the liquidity re-pledge track in the Solana ecosystem, trying to enable the Solana ecosystem to achieve re-pledge through IBC capabilities.
Picasso has just launched LST$DOT, $lsDOT will be used for re-staking to ensure safety. In terms of specific implementation, Picasso is launching a Restaking Vault plan, similar to EigenLayer on Solana. The way it is implemented is roughly as follows:
·Solana via PicassoIBC connection, providing a validator for Solana;
·Users can re-stake LST tokens such as mSOL/jSOL/Orca LP/bSOL on Solana liquidity staking projects (such as Marinade/Jito/Orca/Blaze) to the validator;
·Earn re-staking benefits while protecting network security.
One potential opportunity is that Solanas liquidity staking rate is lower than that of ETH. Data shows that about 8% of SOL is still unstaking, which is good for liquidity staking and also good for liquidity re-staking.
Given that Solana’s liquidity staking project has experienced widespread gains before, if Ethereum’s re-staking narrative rears its ugly head, market funds may once again spill over to the same narrative of Solana.
Related Reading:The re-hypothecation token (LRT) narrative is rekindled, taking stock of its high-potential project opportunities》
Layerless
LayerlessIt is the Omnichain Liquid Restake protocol supported by EigenLayer and LayerZero. Before understanding Layerless, let’s briefly introduce the assets of Omnichain.
Omnichain is a multi-chain application built based on LayerZero. It can separate the underlying multi-chain architecture from the unified products of the application layer, so that end users can no longer consider the complex differences between different public chains and only need to integrate the entire blockchain Ecology is viewed as a complete whole. In the Omnichain ecosystem, the assets held by users will be more unified and secure, and will also have composability that is extremely important for blockchain products.
The assets on Omnichain can be divided into two categories: Omnichain Fungible Token (OFT) and Omnichain Non-Fungible Token (ONFT) based on whether the Token is homogeneous.
Related Reading:Omnichain Token: the new Token standard in the full-chain era》
Layerless is creating the Omnichain Recollateral Token (ORT). When users deposit LST (such as stETH, cbETH or rETH) into EigenLayer, they will receive an ORT (Omnichain Restaked Token), which represents your EigenLayer share, making it liquid, composable and usable in DeFi protocols use.
Layerless uses the LayerZero OFT (Omnichain Fungible Token) standard to make these ORT tokens usable on many chains. Many use cases for EigenLayer re-staking tokens can be found outside of Ethereum, such as L2 Arbitrum, Optimism, Base, Metis, zkSync, Linea, etc.
Currently, Layerless plans to launch a testnet in the first quarter.
Holy Replenishment
In Polygon 2.0, POL is pledged in the staking center, and POL can be re-staking to verify any number of chains on the network. This method is called enshrined re-staking. POL itself can be used to stake any number of chains and participate in any number of roles. This allows stakers to earn higher returns for the same pledged capital.
POL is a large-scale technology upgrade of MATIC. From a protocol perspective, POL can only replace MATIC. Initially, in order to improve Polygons infrastructure and transform it into the value layer of the Internet, Polygon founders and researchers introduced a redesigned Polygon protocol architecture, which included the new token POL.
POL is described as a new generation token. Simply put, Bitcoin is a first-generation token that, despite its important role in the Bitcoin protocol, is a non-productive asset that neither gives its holder any role in the protocol nor Give it incentives to fulfill this role. ETH improved upon this by establishing a second generation of native protocol assets – productive tokens.
Productive tokens enable their holders to become validators in their respective protocols, perform useful work and receive rewards for it. Polygon’s POL takes the next step in this direction with the launch of its third generation native asset, the Super Productivity Token. Similar to productive tokens, POL enables its holders to become validators and receive rewards, but with two improvements: validators can validate multiple chains, and each chain can provide multiple roles for validators (and corresponding rewards).
POL provides the benefits of multi-chain staking without the increased risk of re-staking. With the Polygon 2.0 proposal, the Polygon ecosystem will expand from a single chain to an L2 ecosystem that can easily interoperate and share liquidity
For example, Polygon POS will be L2 in a Polygon zk supported L2 network. Validators secure the hub, run provers to generate proofs, and act as sequencers to batch transactions. The increase in the number of roles validators can play and the number of verifiable chains requires new token designs to power the network.
The utility of POL revolves around validators, with the goal of coordinating and incentivizing them to perform useful work. Validators need to stake POL to join the validator set. Once a validator stakes POL, they enter the validator pool and are eligible to subscribe to validate any Polygon chain. In return for performing this useful work, validators can establish at least three incentive streams:
Protocol rewards: The staking protocol continuously issues a predefined amount of POL and distributes it to all active validators as basic protocol rewards. These rewards will replace the MATIC protocol rewards currently received by Polygon validators.
Transaction Fees: As mentioned above, validators can validate any number of chains, and they typically receive transaction fees from all of these chains.
Additional rewards: In order to attract more validators, some Polygon chains may choose to introduce additional rewards. These rewards can be any token, including but not limited to POL, stablecoins, or native tokens of these Polygon chains.
Speaking of validator incentives, it’s important to note that the concept of validation in Polygon is broader than the usual narrow definition. This further enhances the value proposition of the validator role – in addition to validating multiple chains, validators can also perform multiple roles on a single chain. These roles include: (i) narrow validation, i.e. accepting transactions and generating blocks, (ii) generating zero-knowledge proofs, (iii) participating in the DAC (Data Availability Committee) and any other useful work on any Polygon chain.
According to the official introduction, upgrading from MATIC to POL requires sending MATIC to the upgrade smart contract, which will automatically return the same amount of POL. Token holders will have ample time to upgrade, such as 4 years or more. If the community reaches consensus in support of the proposal, the migration could begin within a few months.
