Liquid Restaked Token | A new DeFi primitive
Today, liquid staking is the largest category by TVL in the crypto space. Since Ethereum transitioned to PoS and the Shapella upgrade enabling withdrawals, the LST ecosystem has expanded like never before. First off is the rise of the LSTfi narrative with new opportunities for holders of LSTs. Stader Labs’ newly launched Ethereum LST, ETHx, is designed to keep the network decentralized while making liquid staking more accessible, reliable and rewarding. Now, Stader is proud to present the next innovation in the staking landscape: Liquid Restaked Token (LRT).
What is Restaking?
Restaking is a process that allows users to stake their ETH and support validation on multiple networks simultaneously, including Ethereum and other protocols integrated with a restaking protocol. This approach utilizes Ethereum’s security layer to enhance capital efficiency throughout the crypto ecosystem, providing stakers with an opportunity to earn additional rewards for their validation services.
When it comes to restaking, a popular protocol is EigenLayer.
What is EigenLayer?
EigenLayer is a protocol built on Ethereum that introduces restaking, a new primitive in crypto-economic security. It lets stakers reuse their ETH on the consensus layer. Users who stake ETH directly on the beacon chain or with liquid staking tokens (LSTs) can opt-in to EigenLayer smart contracts to restake their ETH or LST, support the security of other applications on the network, and get extra compensation for doing so.
With EigenLayer, Ethereum stakers can help secure many services by restaking their staked ETH to specific node operators who, in turn, opt-in to provide economic security to multiple services simultaneously. With restaking, the same staked ETH helps secure more services and increases the rewards for the (delegated) stakers and node operators supporting validation.
Advantages & opportunities of restaking:
Potential challenges faced by restaking
Though restaking offers many opportunities, it also presents challenges that must be addressed effectively.
Introducing LRT (Liquid Restaked Token):
To tackle these problems, the Liquid Restaked Token (LRT) is introduced as a potential solution. The new LRT token is a synthetic token issued for restaked ETH, ETHx or other LSTs. It not only solves the issues mentioned earlier but also allows for easy access to restaking and DeFi at the same time.
Here’s how it works:
The LRT DAO selects validators and services for restaking ETH, with potential future options for validators to join in a permissionless manner. A multi-pool architecture similar to ETHx can facilitate this process.
Ethereum needs a staking ecosystem that ensures a broader and healthier distribution of stake, reducing single points of failure and contributing to greater security for the network.
Powered by Stader Labs, ETHx is a liquid staking solution designed to keep Ethereum decentralized by being accessible, reliable and rewarding for stakers and node operators alike.
In order to ensure Ethereum validation remains scalable and resilient while being decentralized, ETHx features a multipool architecture.
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