Restaking is one of the hottest narratives in 2024 - ever since EigenLayer introduced the concept of restaking; it caught the attention of the market and amassed more than 1bn dollars in total value locked within months.
Good reads. Agree on in the near term, the growth trajectory of EL is tightly tethered to the demand side market, making it more akin to TIA than LDO. However, in the long term, I think EL emerges as a more compelling 'Ethereum Align' target, surpassing both LDO and TIA. EL plays a pivotal role in scaling and upgrading Ethereum in two critical dimensions: network and asset.
First, Ethereum as a network is undergoing a significant paradigm shift characterized by modularity. Over the next 6-24 months, I anticipate the introduction of numerous middlewares (DA/Sequencers/L2 stacks), contributing to Ethereum network's performance but simultaneously raising concerns about fragility due to the buckets effect on security.
Second, Ethereum as an asset is losing some appeal with decreasing staking APR. Using the ~60% average staking ratio for PoS chains as a benchmark, I expect Ethereum's staking ratio rising from the current ~25% to 35-40% in the next 12-24 months, resulting in a less attractive staking APR of < 2.5%. With the increases of risk appetite and a ~10% marketwise APR as we enter a bull market, I expect a considerable migration of ETH holders towards alts.
For ETH to moon this cycle, it is important that the above two challenges be addressed properly (whether in-protocol or not), for which EL offers an elegant solution. IMO, EL stands out as the best ETH beta play compared to LDO and TIA, not to mention the substantial growth and premium it stands to gain upon the implementation of its infrastructure roadmap.
Good reads. Agree on in the near term, the growth trajectory of EL is tightly tethered to the demand side market, making it more akin to TIA than LDO. However, in the long term, I think EL emerges as a more compelling 'Ethereum Align' target, surpassing both LDO and TIA. EL plays a pivotal role in scaling and upgrading Ethereum in two critical dimensions: network and asset.
First, Ethereum as a network is undergoing a significant paradigm shift characterized by modularity. Over the next 6-24 months, I anticipate the introduction of numerous middlewares (DA/Sequencers/L2 stacks), contributing to Ethereum network's performance but simultaneously raising concerns about fragility due to the buckets effect on security.
Second, Ethereum as an asset is losing some appeal with decreasing staking APR. Using the ~60% average staking ratio for PoS chains as a benchmark, I expect Ethereum's staking ratio rising from the current ~25% to 35-40% in the next 12-24 months, resulting in a less attractive staking APR of < 2.5%. With the increases of risk appetite and a ~10% marketwise APR as we enter a bull market, I expect a considerable migration of ETH holders towards alts.
For ETH to moon this cycle, it is important that the above two challenges be addressed properly (whether in-protocol or not), for which EL offers an elegant solution. IMO, EL stands out as the best ETH beta play compared to LDO and TIA, not to mention the substantial growth and premium it stands to gain upon the implementation of its infrastructure roadmap.