Daily Edition · Page 5

THE DAILY INDEX

Technology, AI, software, security, crypto and business

MARKETS & BUSINESS

TLDR Crypto

HOW LIQUID ARE LIQUID RESTAKING TOKENS?

Liquid restaking tokens comprise 73% of EigenLayer deposits and are the next evolution of liquid staking protocols like Lido or Jito. With a 7-day withdrawal period on EigenLayer, the barrier to exit is high, making liquidity and price pegging to ETH critical to the success of LRTs. This article analyzes the liquidity, volatility, and volume of the top 5 LRTS – Ether.fi, Renzo, Puffer, Swell, and Kelp DAO – finding that they are not incredibly liquid but have been slowly improving. The LRT market has winner-take-most characteristics since liquidity and integrations are critical to an LRT’s broader success.

SOME MUSINGS ON RESTAKING PROTOCOLS

Though EigenLayer is the clear market leader in the restaking space, other ecosystems may introduce similar protocols that use SOL or TIA as collateral. As the first asset-agnostic platform, Karak may see a first-mover advantage, especially since it accepts stablecoins. At the same time, single-ecosystem protocols like Lido or Jito have historically performed better, and partnerships with liquid staking and DeFi protocols will prove critical in gaining adoption and integrations.

COMMODITISING YOUR COMPLEMENTS WITH MODULAR ARCHITECTURE

The commoditization of blockchain infrastructure, enabled by more competitors and options in the modular stack, is catalyzing a new wave of customized, application-specific rollups. By leveraging components like data availability layers (Celestia, Avail, and EigenDA), rollup SDKs (Sovereign and RollKit), and shared sequencers (Astria and Espresso), developers can focus on optimizing applications without the burden of managing the entire stack. At the same time, infrastructure providers can increase demand for their products and protocols by decreasing the cost of using them by commoditizing the complements or tools an application relies on.

BLUR GOT THE FEEDBACK LOOP WRONG

By incentivizing users to stay liquid and continuously bid, NFT marketplace Blur may have had the lowest floors, but at the cost of incrementally devaluing NFTs on its platform. Activity on the marketplace, which rewards users with BLUR tokens, was an effective strategy to capture market share and volume in the short term, but it was not strong enough to keep competitor Magic Eden from doubling its daily trading volume and becoming the leading NFT marketplace by revenue. Part of this is due to Magic Eden’s adoption of Bitcoin Ordinals instead of Blur’s focus on Ethereum mainnet.

TLDR IndexPage 5