jakiro
Source: Coinbase; Compilation: White Water, Bitchain Vision Realm
summary
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The pledge is laying the foundation for the new decentralized financial products on Ethereum, but the complexity of this new income flow is not insignificant.
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The rise of liquidity based on these processes not only reflects these complexity, but also may bring hidden risks to the ecosystem.
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In other words, we believe that from the long run, pledge will play a core role in motivating verifications, because the number of pledge issuance in the future may decrease.
Ethereum’s equity certificate (POS) consensus mechanism is the largest economic security fund in cryptocurrencies, with a total of nearly $ 112 billion.However, the authentication of network security can not only earn basic rewards through locking ETH.For a long time, the mobile pledged token (LST) has been a way for participants to bring their ETH and consensus layer income into the DEFI field -can be traded or re -pledged as pledge in other transactions.Now, the appearance of the pledge has introduced another layer in the form of liquidity re -pledged tokens (LRT).
Ethereum’s relatively mature pledge infrastructure and excess security budget enable Eigenlayer to grow into the second largest DEFI protocol (total lock value (TVL)) in an ecosystem.EIGENLAYER enables verificationrs to ensure the security of active verification services (AVS) by pledged ETH to obtain additional rewards.Therefore, intermediaries in the form of liquidity re -pledge protocol have become more and more common, which has promoted the spread of LRT.
In other words, we think,From a security and financial perspective, compared with existing pledged products, pledge and LRT may bring additional risks.With the increase of the number of AVS and the differentiation of the LRT strategy, these risks may become increasingly opaque.Nevertheless, the re -pledge (and pledge) rewards are laying the foundation for the new DEFI agreement.If these proposals are implemented, separate discussions that reduce pledge distribution to minimum feasible distribution (MVI) may further increase the relatively important importance of long -term pledge yields.Therefore, excessive attention to re -seizing opportunities is becoming one of the biggest encryption themes this year.
Ethereum pledged foundation
Eigenlayer’s re -escort agreement will be launched online in June 2023 on the Ethereum main network. AVS will be launched in the next stage of its multi -stage deployment (the second quarter of 2024).In factEigenlayer’s “re -pledge” concept has established a method of protecting Ethereum new features for verificationrs, such as data availability layers, ROLLUP, bridge, prophecy machine, cross -chain message, etc., and may get additional rewards in this process.This represents a new source of income in the form of “security is service”.Why is this a hot topic?
As the largest POS cryptocurrency, ETH currently has a huge economic foundation to protect its network from malicious majority attacks.However, at the same time, the continuous growth of verifications and pledged ETH can be said to have exceeded the scope of the protection of the network.At the merger (September 15, 2022), 13.7 million ETH pledged by pledged, probably enough to ensure that 22.1 million ETH network TVL at that time.As of the news that we are about to release, about 31.3 million ETHs have been pledged, and the number of ETH pricing has tripled, but Ethereum is actually lower (below 2022) for Eto.(See Figure 1).
The security, liquidity and reliability of too much pledged ETH and basic assets have unique advantages and help promote the security of other decentralized services.In other words, we believe that the concept of re -pledge is largely inevitable, as an extension of ETH’s inherent value.However, there is no free lunch in the world.To ensure the correctness of these services,Refined for behavior verification, and may be detained or reduced, similar to traditional pledge.(In other words, when the first group of AVS was launched in the second quarter of 2024, it will not be reduced.)Like pledges, the pledged operator will get additional ETH (or AVS tokens) due to its service.
Liquid
So far, Eigenlayer’s TVL growth is shocking, second only to Lido (Ethereum leading liquid pledge agreement).EIGENLAYER achieves this goal, while retaining the maximum deposit limit of the process, and before starting any real -time AVS.In other words, it is difficult to decompose the continuous re -pledge demand with the user’s interest in short -term points and airdrop mining.Although with the maturity of the agreement, the number of E ERH pledged ease may continue to increase, but we believe that, we believe thatTVL may decline in short -term when the end -of -mining or early AVS reward is lower than expected.
EIGENLAYER Based on the existing pledge ecosystem by pledged various underlying LST LST Ponds or native pledge ETH (via EigenPods).In terms of procedure, the verifications point their withdrawal address to EIGENPODS to obtain EIGEN points. These points will be exchanged for protocol rewards in the future.LST (1.5 million ETH) in EIGENLAYER accounts for about 15%of all LST, and the total amount of ETH locked in Eigenlayer occupies nearly 10%(3m, a total of 31.3 million ETH) of all ETHs pledged.(LST itself accounts for 43%of all pledge ETH in the ecosystem.) In fact, we believe that after the pledge demand has stabilized after October 2023, the recent interest in the new authenticity has been caused by re -pledge.In February 2024, more than 2 million ETHs were pledged, which coincided with the temporary suspension of Eigenlayer’s deposit.In fact, some LST providers are raising their target APY as a way to attract new users to use their own platform with their own pledge interest.
Drawing on the popularity of LST, the rich LRT ecosystem has developed, and more than six protocols provide liquidity re -pledged token versions with various points and airdrop solutions.About 2.1 million (62%) of the 3M ETH protected in Eigenlayer was encapsulated in the secondary agreement.We have seen similar models in the liquid pledge market and believe that with the development of the industry, the diversification of alternatives will be very important.
In the long run,If the volume of primary pledge issuance decreases due to increased pledge participation (with the addition of more verifications, the yield will be reduced), and then pledge may become an increasingly important way for ETH yields.A separate discussion on reducing the separation of ETH in this pledged ETH may further improve the correlation of the rebate yields (although this is still in the early stage of the discussion stage).
despite this,AVS yields are expected to be relatively low after launch, which may bring challenges to LRT in the short term.For example, the largest LRT Ether.Fi charges 2% annualized platform fee for its TVL for its “vault management”.However, not all LRTs have the same charging structure, so there is room for competition in this regard.But if we use these 2% of the cost as the standard for calculating the cost of profit and loss, AVS will need to pay about 200 million US dollars (based on US $ 12.4 billion for pledge value) for EIGENLAYER’s security services every year to achieve a profit and loss balance -than AAVE or MakerThe costs have been charged in the past year.This raises a question:How much AVS needs to generate the overall income of ETH pledges.
The emergence of active verification services
To this day, any AVS has not been launched on the main network.The first AVS (early 2024) will be EIGENDA, which is a data availability layer that can play a similar role in storing the BLOB storage of Celestia or Ethereum.After the DENCUN upgrade successfully reduced the cost of Layer 2 (L2) by more than 90%, we believe that EIGENDA will become another tool in the modular tool library, which can achieve cheaper L2 transactions.However, building or migrating L2 to use EIGENDA is a slow process. It may take several months to bring meaningful income to the agreement.
In order to estimate the initial income of EIGENDA, we can compare with the Ethereum BLOB storage cost.At present, about 10 ETH is used for many major L2 BLOB transactions per day, including Arbitrum, Optimism, Base, ZKSYNC, and Starknet (see Figure 5).If EIGENDA sees a similar level of use, according to our conservative estimates, the annualized annualization rate of pledges each year is about 3.5K ETH, which is equivalent to about 0.1%of the additional rewards.We believe that although additional AVS may increase income rapidly, the cost of the previous few months may be lower than expected.
Other AVs built in the EIGENLAYER ecosystem include interoperability networks, fast final layers, position certification mechanisms, COSMOS chain security guidance procedures, etc.The opportunity space for AVS is extremely extensive and growing.Restakers can choose to choose which AVS they want to use ETH pledge products, although this process becomes more and more complicated for each new AVS.
Dark corner
This raises a question:How to deal with different LRTs (1) AVS selection, (2) potential reduction, (3) final tokens finance.In the traditional pledge, the one -to -one mapping between the verifier’s responsibility and the income is clear. Considering all the factors, LST becomes a relatively simple thing.However, by pledge, more complications of how to accumulate and distribute income (and losses) are added to one -to -one structure.LRT not only pays basic ETH pledge rewards, but also pays a set of AVS rewards.This also means that the potential returns paid by different LRT issuers will be different.
At present, many LRT models have not been completely clear.However, because each project has only one LRT, all toke holders in the given protocol may be unified by AVS incentives and cut conditions.The design of these mechanisms may vary from LRT providers.
A suggestion is to adopt a layered method. LRT issuers can adopt a series of AVS of “high” and “low” risks, although this needs to establish an unfarished risk standard.In addition, according to architecture design, the final reward of tokens may still pay the sum of all AVS, and we believe that this violates the purpose of the risk -stratified framework.Alternatively, decentralized autonomous organizations (DAO) can decide which AVS selection, but this triggers whose key decision makers in these DAOs.Otherwise, LRT providers can act as the EIGENLAYER interface and allow users to retain which AVS decision -making power is used.
New risk
However, when released, the pledge process should be relatively simple for operators, because EIGENDA will be the only AVS that needs to be protected.However, one feature of Eigenlayer is that investing in an AVS ETH can be further put into other AVS.Although this can increase income, it will also exacerbate risks.When the layered structure involving the reduction between the service and the claiming conditions, the same re -pledged ETH to multiple AVS will bring challenges.Each service will create its own custom reduction conditions, so this may occur:One AVS cuts the re -pledged ETH due to improper behavior, while the other AVS hopes to recover ETH that pledged the same pledge as compensation for damaged participants.This may lead to a final cut -off conflict, although as mentioned earlier, EIGENDA will not have cutting conditions at the first start.
To further complicate this settings, Eigenlayer’s “pool security” model (where AVS uses pledged ETH public pools to protect its services) can be further customized through “belonging security”.In other words, personal AVS can be obtained (extra) ETH pledged. These ETHs are only used to ensure the safety of its specific services -this is a kind of insurance or security network form for AVS payment premiums.Therefore, with the launch of more AVS, the role of operators has become more complicated in technology, and the reduction of rules has become more difficult to follow.In addition to the complexity of this re -pledge, LRT expansion also abstracts many potential strategies and risks from tokens.
This is a problem because we think that people will eventually go to the most returns provided by these LRT providers.Therefore, LRT may be motivated to maximize its yield to obtain market share, but this may be at the cost of higher (although it is hidden) risk.in other words,What we think is important is the return of risk adjustment, not an absolute return, but it may be difficult to maintain transparency in this regard.This may lead to additional risks, because LRT DAO will be inspired to maximize multiple pledge to maintain competitiveness.
In addition, if LRT expenditure is completely carried out in ETH, LRT may also cause downward selling pressure on non -ETH AVS rewards.In other words, if LRT needs to convert native AVS tokens to ETH (or ETH equivalent) to re -assign rewards to LRT token holders, the value of pledge may be limited by repeated selling pressure.
In addition, LRT has a valuation risk that cannot be ignored.For example, if the pledge withdrawal queue is extended (after the Ethereum Dencun fork, the verifiers’ loss limit has been reduced from 14 to 8), LRT may temporarily deviate from its basic value.If LRT becomes a widely accepted pledge form (such as LST in the borrowing agreement) in DEFI, this may accidentally exacerbate the liquidation, especially in the low liquidity market.
This is assuming that these DEFI protocols can first correctly evaluate the pledge value of LRT.In fact, LRT represents different investment portfolios, and the risk status of these shares may change over time.You can add or delete new constituent stocks, or the risk of income or solvency of AVS itself may change.Assuming, we may see such a situation: market downturn may affect multiple AVS at the same time, thereby destroying the stability of LRT and amplifying the risk of mandatory liquidation and market fluctuations.Recursive lending will only enlarge these losses.On the other hand, the protocol that can decompose the LRT into its principal and income component can help reduce this risk to a certain extent, because the principal of the tokenization can be used as primitive pledge, and the benefits of token canUsed for interest rate interchange.
Finally, as Ethereum co -founder Vitalik Buterin emphasized, in some cases, in some casesThe major failure in the re -pledge mechanism may threaten the underlying consensus agreement of Ethereum.If the number of ETH pledged ETH is large enough compared to all pledged ETH, there may be economic incentives to enforce error decisions that may lead to unstable network.
Summarize
Eigenlayer’s re -escort agreement is expected to become the cornerstone of various new services and middleware on Ethereum, which in turn can also generate meaningful ETH reward sources for verifications in the future.The AVS from EIGENDA to Lagrange can also greatly enrich the Ethereum ecosystem itself.
In other words, the use of an LRT packaging device around the underlying protocol may cause hidden risks due to opaque re -assigning strategies or temporary dislocation of the underlying protocol.How to choose the AVS they want to protect and allocate risks and rewards to LRT holders are still an unspeakable issue.In addition, the initial yield of AVS may not reach extremely high expectations of market settings, but we expect that as the AVS adoption rate increases, this situation will change over time.despite this,We believe that the pledge supports the open innovation of Ethereum and will become the core part of the ecosystem infrastructure.
