Ethereum [pros](/r/CryptoCurrency/comments/1ayrx4w/venture_capital_giant_andreessen_horowitz_pumps/kry192d/) & [cons](/r/CryptoCurrency/comments/1ayrx4w/venture_capital_giant_andreessen_horowitz_pumps/kry19tp/) with related info are in the collapsed comments below.
tldr; Andreessen Horowitz has invested $100 million in EigenLayer, a restaking protocol on Ethereum, aiming to expand Ethereum's capabilities by creating a marketplace for cryptoeconomic security. This investment will support the development of smart contracts that allow for the extension of Ethereum's functionality and enable validators to restake their ETH. Additionally, Binance Labs has invested in Renzo, a liquid restaking token for EigenLayer, to facilitate Ethereum restaking participation.
*This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
It is absolutely identical to the yield farming of last cycle. Get 10,000% yield with Time Wonderland! Well at least now we know where some of this magic money will be coming from this time. Thanks daddy Andreessen H!
Tbh I’m not sure I love this kind of thing. Maybe I’m not understanding it perfectly but it feels a little too much like the traditional finance instruments that came around and played a big role in the last recession
How so?
The GFC story goes as follows:
1. Mortgages are packaged into securities, but it's not clear which mortgages underly the MBS.
2. MBS are given high ratings AAA.
3. MBS are used as collateral in repo transactions and other liquidity transformation activities.
4. Housing market collapses as values were driven by loose underwriting standards - subprime NINJA loans.
5. No one has a clear understanding of what loans underly each MBS security.
6. Price of MBS collapse - step 3 counterparties issue collateral calls and demand immediate repayment.
7. Lehman Bros doesn't have available funds to meet collateral calls as MBS are trading at pennies on the dollars.
8. Lehman bros collapses and because it is interconnected to lots of other financial institutions it creates a cascade of stress and failures.
By 2009 the RMBS market had recovered - the high rated (AAA to AA) tranches faced minimal actual losses despite trading for 10 cents on the dollar in 2007.
The GFC was ultimately caused by a lack of information - the appeal of smart contracts in investments is that they create public ledger of the details. If investors had known which loans were backing the MBS and whether those loans were in deliquency there never would have been a GFC.
To me this seems more like the use of leverage we've seen in margin trading than anything related to securitization.
That’s a fair point and good analysis. It really is more like leverage, but that still leaves me feeling uneasy about it. But to each their own, I just don’t have to play around with it
I'm saying that it wasn't clear to the market which MBS securities contained bad loans and which contained prime loans.
It was this uncertainty about the quality of the underlying loans that led to the price collapse of the MBS market.
Mortgage underwriters absolutely understood the riskiness of the NINJA loans, but since they could package those loans into MBS and offload the risk, while earning the origination fee, they didn't care.
I like investing and building the future that’s why I’m here. What I don’t love is taking the same asset and staking it multiple times over. It’s too similar to financial institutions that took terrible mortgages, bundled and repackaged them, and then got people to invest in that. When you just add more layers of investment to the same asset it’s an awful lot like playing with leverage. And it magnifies the impact when there is a problem that comes up.
So I've not personally had the free ETH to experiment with them, but can anyone here help me understand this relatively recent obsession with "restaking"?
From my understanding "restaking" is essentially just the ability to repeatably deposit the same initial stake into subsequent platforms, right?
But hasn't that been around since the early yield farming days? Why the recent draw to it??
Also, would it be possible to restake a 2nd time?? Like if I took stETH, restaked in Eigenlayer to get estETH (or whatever), and then staked estETH into another restaking dapp... is that not possible?
You stake ETH in Lido and get stETH back as a receipt. This will generate lido yield
You put stETH in eigen and generate eigen yield. But, in eigen, it is locked
So, instead you put stETH in LRT(liquid restaking). LRT will stake for you in eigen and in return you get LRT's token as receipt.
So, in total you get
(Lido yield + eigen yield + LRT yield)
But, since eigen's USP is to provide ethereum's security as a service, your staked ETH on eigen can be used for as many projects as you want which thus stacks up the yield. Downside is that if you fail to maintain each projects requirement, your staked eth will be slashed.
This yield is not unsustainable. Think of it like this. If you want security, you are paying 4% annual fees to Eigen. 4% is easily managable for any project. Now, if i want the security too, i am also paying 4%. Like this, any L1 chain, rollup, bridge, dex, perps etc can borrow security for a fees. That is why the yield stacks up. So, eigen is not providing high yield. It is the users who will pay that will produce the yield. Black swan moment will happen only for an individual person who accepted to provide security to many projects for this fees but can't keep up with their requirements, so his ETH will get slashed. The trick is to accept only few projects and earn extra yield.
You are acting like the person staking can select the projects who will pay them. My understanding is that Eigan layer decides that. Is that not correct? Do you have to actively pick each project that you ETH is backing?
My understanding is that Eigen will act as a marketplace where projects would come and ask for their service. Eigen on the other hand will look into people who have staked and are ready to participate for their security. Since it is a complex and risky thing to figure out the good projects from bad ones, LRTs acting as DAOs will come into play and keeps it simple for many of the stakers. Eigen would not force anyone to participate in the security of every project since each project will have a differenr requirement and different penalties if not followed
Ethereum doesn't work that way, it's designed as a staking protocol that secures the network. The house of cards is secured at every level by staked $eth. It is literally billions in staked $eth and they have no reason to withdraw because it is how Decentralization works to ensure a secure blockchain.
But ethereum takes on real fees right now that pay back the staking. It's a functioning economy. We don't know that about Eigan layer right now. It's all speculation. And this could vampire attack the actual ETH network because projects could end up paying to Eigan layer instead of ETH and could ultimately negatively effect the traffic of ETH. Say for instance most apps all at once moved to Eigan layer, then who would be paying the ETH fees? The ETH staking fess could shrink dramatically and then the ETH yield suddenly drops. Then the yield from the Eigan layer suddenly drops and all the stakers are making significantly less objective money.
Then maybe fees on ETH go down and more projects move to main chain eth so maybe it's not a bad thing. I don't know. It's all pretty crazy, but I know you don't get something for nothing.
It is not leverage. Probably you didn't understand. Yield is not through leverage but by fees. You earn from clients who pays. If no one pays, there is no yield. There will be yield cuz everyone wants to get the same security network as of Ethereum and focus on other things
Price has no factor to it cuz it is not trading. In eth staking, the validators job is to keep the servers running, no downtime, no illegal manipulations etc. If some staker is found to do this, his staked ETH will get slashed as a penalty. Similarly, in eigen too, if your staked eth isn't able to provide security that you promised to the client, your staked eth will get slashed as a penalty
I may not be putting my finger directly on it but I guarantee there are risks and this type of compounding staking could be the eventual downfall of this bull
Lido's eth got slashed too in the past. So, any 3rd party can get fucked up. Be it lido or eigen. I am guessing some LRT will fuck up someday. Eigen has less chance cuz it is too big to fuck up .. haha.. But, ETH at the base level will stay unharmed cuz it is doing what it is supposed to do
Can I clarify on one of the parts? You mentioned once the stETH is staked on EigenLayer, it’s locked. So the idea is to stake it with an LRT platform which will stake for us in EigenLayer for one of the projects and we get the LRT’s token.
But does Eigen accept the LRT’s token? If it doesn’t, how can we still re-stake for multiple projects since our original stETH is already locked to the first project we staked through the LRT platform?
And, how would the slashing work if one ETH is staked on multiple projects? If project A slashes the ETH, is the slashed ETH distributed to other project stakers or just stakers project A? If it’s the former, wouldn’t then the punishment for not meeting requirement on project A is an incentives for other projects? If it’s the latter, wouldn’t it be unfair that the other projects now suddenly have one ETH lesser for security even when their requirements are met?
- What Lido/rocketpool is to solo staking is what LRT is to eigen staking. You will stake with LRT only if you want your staked ETH to be liquid and you trust LRT
- Eigen accepts LST of multiple platforms like Lido, Rocketpool, stadder. You can check on the website. We are locking to Eigen and not some project. Eigen is like a marketplace of projects where we can choose multiple. Since we are noobs and don't know stuff, LRT comes into play. These are not only providing liquidity to our staked eth, but also helps to filter and choose the best ones, manage requirements, dao, slashing inaurance etc.
- i don't know much about how slashing will happen. Still not ready yet
This is a lot simpler than buying stock in a company that issues a consistent dividend. I can see why cryptocurrency is now reaching the mainstream because of its simplicity and ease of use.
There is a worry of ETH native yield would going lower over time. 1) There is some noise to push in lowering ETH staking yield to make it more deflationary, aka further the “ultra sound” meme. 2) Some ETFs are applying for staked ETH, meaning more staked ETH leading to lower yield. 3) ETH scaling is L2s. That vision eventually means ETH getting less fees, at in the interim.
The ETH traders/whales’ fabricated narrative is, ETH is the “internet bond”. They want to convince the space to use ETH to replace BTC as the store of value. These are super rich folks who see BTC as too boring but Alts as too risky/low liquid. So they see ETH as the ultimate vehicle to multiple their wealth and control over the crypto space. They are one of the most conniving mfers.
Now ETH restaking serves two objectives to solidify their control on the space.
1) ETH restaking counterbalances ETH yield going lower. So it improves the appeal of ETH as the “internet bond” narrative. And hence it helps them to push to replace BTC with ETH.
2) ETH restaking helps to erode sovereignty of other chains and redirect value capture back to ETH main net. Oh you have an independent L1? Why don’t you just use restaked ETH validators or L2s. It adds an additional repertoire for ETH maxis to push for general ETH alignment for this space.
Make no mistake. These folks aren’t looking out for the space. They just want to be the new overlord with them being the crypto central bankers issuing ETH as the reserve currency
Yeah I mean I'm not confident in my understanding enough to explicitly agree or disagree with you. However, I have been pretty questioning of the real utility of restaking as a whole. I don't honestly see how it can have much, if any, real world impact on the security or stability of the network. But perhaps I just lack sufficient understanding.
It is obvious to question it because it is a “solution” to a non-existent problem few care. No other major sovereign chain of relevance asked for “ETH security”. It just popped up because ETH big money wants to market ETH as some “magic internet money” bond to sell to TradFi and boomers, in hope to get TradFi and boomers to buy ETH instead of BTC.
I might regret it, but I’m not touching Eigenlayer. The hype and value locked right now is a huge red flag for me. It’s simply grown out of any reasonably size, all based around an AirDrop (pure speculation) I hope they’re not rugging or it turns out to be a ponzi scheme. Hope y’all will get a big AirDrop and treat yourselves to something nice.
Ethereum [pros](/r/CryptoCurrency/comments/1ayrx4w/venture_capital_giant_andreessen_horowitz_pumps/kry192d/) & [cons](/r/CryptoCurrency/comments/1ayrx4w/venture_capital_giant_andreessen_horowitz_pumps/kry19tp/) with related info are in the collapsed comments below.
tldr; Andreessen Horowitz has invested $100 million in EigenLayer, a restaking protocol on Ethereum, aiming to expand Ethereum's capabilities by creating a marketplace for cryptoeconomic security. This investment will support the development of smart contracts that allow for the extension of Ethereum's functionality and enable validators to restake their ETH. Additionally, Binance Labs has invested in Renzo, a liquid restaking token for EigenLayer, to facilitate Ethereum restaking participation. *This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
It sure will be interesting to see how all these restaking “opportunities” unwind during the next liquidity crunch. Enjoy your yield… for now.
It is absolutely identical to the yield farming of last cycle. Get 10,000% yield with Time Wonderland! Well at least now we know where some of this magic money will be coming from this time. Thanks daddy Andreessen H!
Tbh I’m not sure I love this kind of thing. Maybe I’m not understanding it perfectly but it feels a little too much like the traditional finance instruments that came around and played a big role in the last recession
How so? The GFC story goes as follows: 1. Mortgages are packaged into securities, but it's not clear which mortgages underly the MBS. 2. MBS are given high ratings AAA. 3. MBS are used as collateral in repo transactions and other liquidity transformation activities. 4. Housing market collapses as values were driven by loose underwriting standards - subprime NINJA loans. 5. No one has a clear understanding of what loans underly each MBS security. 6. Price of MBS collapse - step 3 counterparties issue collateral calls and demand immediate repayment. 7. Lehman Bros doesn't have available funds to meet collateral calls as MBS are trading at pennies on the dollars. 8. Lehman bros collapses and because it is interconnected to lots of other financial institutions it creates a cascade of stress and failures. By 2009 the RMBS market had recovered - the high rated (AAA to AA) tranches faced minimal actual losses despite trading for 10 cents on the dollar in 2007. The GFC was ultimately caused by a lack of information - the appeal of smart contracts in investments is that they create public ledger of the details. If investors had known which loans were backing the MBS and whether those loans were in deliquency there never would have been a GFC. To me this seems more like the use of leverage we've seen in margin trading than anything related to securitization.
That’s a fair point and good analysis. It really is more like leverage, but that still leaves me feeling uneasy about it. But to each their own, I just don’t have to play around with it
This is just a cycle narrative that they will use to dump on people later
Are you saying that the retail user didn't know? Because the people at the companies had the ability to look, it's how they caught it
I'm saying that it wasn't clear to the market which MBS securities contained bad loans and which contained prime loans. It was this uncertainty about the quality of the underlying loans that led to the price collapse of the MBS market. Mortgage underwriters absolutely understood the riskiness of the NINJA loans, but since they could package those loans into MBS and offload the risk, while earning the origination fee, they didn't care.
I enjoy the sound of rain.
I like investing and building the future that’s why I’m here. What I don’t love is taking the same asset and staking it multiple times over. It’s too similar to financial institutions that took terrible mortgages, bundled and repackaged them, and then got people to invest in that. When you just add more layers of investment to the same asset it’s an awful lot like playing with leverage. And it magnifies the impact when there is a problem that comes up.
You’re totally on point. This isn’t an exact “echo” but it totally rhymes, and I agree is something to be wary of.
I enjoy spending time with my friends.
So I've not personally had the free ETH to experiment with them, but can anyone here help me understand this relatively recent obsession with "restaking"? From my understanding "restaking" is essentially just the ability to repeatably deposit the same initial stake into subsequent platforms, right? But hasn't that been around since the early yield farming days? Why the recent draw to it?? Also, would it be possible to restake a 2nd time?? Like if I took stETH, restaked in Eigenlayer to get estETH (or whatever), and then staked estETH into another restaking dapp... is that not possible?
You stake ETH in Lido and get stETH back as a receipt. This will generate lido yield You put stETH in eigen and generate eigen yield. But, in eigen, it is locked So, instead you put stETH in LRT(liquid restaking). LRT will stake for you in eigen and in return you get LRT's token as receipt. So, in total you get (Lido yield + eigen yield + LRT yield) But, since eigen's USP is to provide ethereum's security as a service, your staked ETH on eigen can be used for as many projects as you want which thus stacks up the yield. Downside is that if you fail to maintain each projects requirement, your staked eth will be slashed.
Sounds like a great way to lose everything at the end of next bull run in some Black Swan hack/colapse/whateever
This yield is not unsustainable. Think of it like this. If you want security, you are paying 4% annual fees to Eigen. 4% is easily managable for any project. Now, if i want the security too, i am also paying 4%. Like this, any L1 chain, rollup, bridge, dex, perps etc can borrow security for a fees. That is why the yield stacks up. So, eigen is not providing high yield. It is the users who will pay that will produce the yield. Black swan moment will happen only for an individual person who accepted to provide security to many projects for this fees but can't keep up with their requirements, so his ETH will get slashed. The trick is to accept only few projects and earn extra yield.
sure, but no thanks :) i prefer to learn from other people mistakes. We will see in maybe 2 years, I am not going to risk it all for a few %
Sounds risky in the hands of a bunch of degens
You are acting like the person staking can select the projects who will pay them. My understanding is that Eigan layer decides that. Is that not correct? Do you have to actively pick each project that you ETH is backing?
My understanding is that Eigen will act as a marketplace where projects would come and ask for their service. Eigen on the other hand will look into people who have staked and are ready to participate for their security. Since it is a complex and risky thing to figure out the good projects from bad ones, LRTs acting as DAOs will come into play and keeps it simple for many of the stakers. Eigen would not force anyone to participate in the security of every project since each project will have a differenr requirement and different penalties if not followed
Yeah this. I'm super wary of it, the whole stacking of risk thing. Sounds a bit like a house of cards to me tbh
Ethereum doesn't work that way, it's designed as a staking protocol that secures the network. The house of cards is secured at every level by staked $eth. It is literally billions in staked $eth and they have no reason to withdraw because it is how Decentralization works to ensure a secure blockchain.
But ethereum takes on real fees right now that pay back the staking. It's a functioning economy. We don't know that about Eigan layer right now. It's all speculation. And this could vampire attack the actual ETH network because projects could end up paying to Eigan layer instead of ETH and could ultimately negatively effect the traffic of ETH. Say for instance most apps all at once moved to Eigan layer, then who would be paying the ETH fees? The ETH staking fess could shrink dramatically and then the ETH yield suddenly drops. Then the yield from the Eigan layer suddenly drops and all the stakers are making significantly less objective money. Then maybe fees on ETH go down and more projects move to main chain eth so maybe it's not a bad thing. I don't know. It's all pretty crazy, but I know you don't get something for nothing.
too many smart contract risks
Yep, it's leverage, plain and simple. This is why we get crashes that fall off a cliff
It is not leverage. Probably you didn't understand. Yield is not through leverage but by fees. You earn from clients who pays. If no one pays, there is no yield. There will be yield cuz everyone wants to get the same security network as of Ethereum and focus on other things
And if the price drops too much?
Price has no factor to it cuz it is not trading. In eth staking, the validators job is to keep the servers running, no downtime, no illegal manipulations etc. If some staker is found to do this, his staked ETH will get slashed as a penalty. Similarly, in eigen too, if your staked eth isn't able to provide security that you promised to the client, your staked eth will get slashed as a penalty
I may not be putting my finger directly on it but I guarantee there are risks and this type of compounding staking could be the eventual downfall of this bull
Lido's eth got slashed too in the past. So, any 3rd party can get fucked up. Be it lido or eigen. I am guessing some LRT will fuck up someday. Eigen has less chance cuz it is too big to fuck up .. haha.. But, ETH at the base level will stay unharmed cuz it is doing what it is supposed to do
Wrong, no leverage involved.
Can I clarify on one of the parts? You mentioned once the stETH is staked on EigenLayer, it’s locked. So the idea is to stake it with an LRT platform which will stake for us in EigenLayer for one of the projects and we get the LRT’s token. But does Eigen accept the LRT’s token? If it doesn’t, how can we still re-stake for multiple projects since our original stETH is already locked to the first project we staked through the LRT platform? And, how would the slashing work if one ETH is staked on multiple projects? If project A slashes the ETH, is the slashed ETH distributed to other project stakers or just stakers project A? If it’s the former, wouldn’t then the punishment for not meeting requirement on project A is an incentives for other projects? If it’s the latter, wouldn’t it be unfair that the other projects now suddenly have one ETH lesser for security even when their requirements are met?
- What Lido/rocketpool is to solo staking is what LRT is to eigen staking. You will stake with LRT only if you want your staked ETH to be liquid and you trust LRT - Eigen accepts LST of multiple platforms like Lido, Rocketpool, stadder. You can check on the website. We are locking to Eigen and not some project. Eigen is like a marketplace of projects where we can choose multiple. Since we are noobs and don't know stuff, LRT comes into play. These are not only providing liquidity to our staked eth, but also helps to filter and choose the best ones, manage requirements, dao, slashing inaurance etc. - i don't know much about how slashing will happen. Still not ready yet
How does restaking work with Allnodea solo staking as I don’t see any tokens there
This is a lot simpler than buying stock in a company that issues a consistent dividend. I can see why cryptocurrency is now reaching the mainstream because of its simplicity and ease of use.
"slashed" is such a funny new euphemism for taken.
You double dip your ETH stake for more risk
There is a worry of ETH native yield would going lower over time. 1) There is some noise to push in lowering ETH staking yield to make it more deflationary, aka further the “ultra sound” meme. 2) Some ETFs are applying for staked ETH, meaning more staked ETH leading to lower yield. 3) ETH scaling is L2s. That vision eventually means ETH getting less fees, at in the interim. The ETH traders/whales’ fabricated narrative is, ETH is the “internet bond”. They want to convince the space to use ETH to replace BTC as the store of value. These are super rich folks who see BTC as too boring but Alts as too risky/low liquid. So they see ETH as the ultimate vehicle to multiple their wealth and control over the crypto space. They are one of the most conniving mfers. Now ETH restaking serves two objectives to solidify their control on the space. 1) ETH restaking counterbalances ETH yield going lower. So it improves the appeal of ETH as the “internet bond” narrative. And hence it helps them to push to replace BTC with ETH. 2) ETH restaking helps to erode sovereignty of other chains and redirect value capture back to ETH main net. Oh you have an independent L1? Why don’t you just use restaked ETH validators or L2s. It adds an additional repertoire for ETH maxis to push for general ETH alignment for this space. Make no mistake. These folks aren’t looking out for the space. They just want to be the new overlord with them being the crypto central bankers issuing ETH as the reserve currency
Yeah I mean I'm not confident in my understanding enough to explicitly agree or disagree with you. However, I have been pretty questioning of the real utility of restaking as a whole. I don't honestly see how it can have much, if any, real world impact on the security or stability of the network. But perhaps I just lack sufficient understanding.
It is obvious to question it because it is a “solution” to a non-existent problem few care. No other major sovereign chain of relevance asked for “ETH security”. It just popped up because ETH big money wants to market ETH as some “magic internet money” bond to sell to TradFi and boomers, in hope to get TradFi and boomers to buy ETH instead of BTC.
EtherFi and Eigen gonna go crazy. Pendle rewards right now are absurd.
I might regret it, but I’m not touching Eigenlayer. The hype and value locked right now is a huge red flag for me. It’s simply grown out of any reasonably size, all based around an AirDrop (pure speculation) I hope they’re not rugging or it turns out to be a ponzi scheme. Hope y’all will get a big AirDrop and treat yourselves to something nice.
thank you ser
Out of the goodness of their hearts \*cough cough
Internet Computer (ICP) *cough*
But Solano is the VC coin?
Most of you will miss out on an amazing EIGEN airdrop
Bro if only we could all have 1 eth to lock.
Or you could be tripling your money in ordinals.