Restaking Panel | ETHTaipei 2024

okay uh good morning everyone uh thank you for hosting me here so we're going to make a introduction into liquid R scking before uh the panel that will be right after uh so I guess most of you already heard about Egan layer and what it is uh so I'll try to be quite brief about Egan layer and to Deep dive a little bit more into liquid resticking where it can be a bit more confusing for some people because there there are definitely some differences when compared to esst um so Egan ler first is a Marketplace for decentralized trust so uh if you are a middleware it's going to be very challenging if you're innovating in the space to acquire trust uh because maybe your revenues are not necessarily so high and then it's very challenging uh you know for the last few years uh to let's say you want to compete with chain link uh with the Oracle and you want to acquire trust so the first attempts we saw was you come up with the token you need to inflate the token right give additional rewards to try to attract trust and then you realize that your revenues are not picking up as fast as you wish and then you yeah you realize that that's going to be very challenging right to come up with some decentral decentralization and acquire trust and the the main innovation of Egan leer and that's why so people so many people are excited about that is you can actually um whatever revenues you have you you can just basically uh borrow that that's trust which is basically restak is of eth meaning you just receive additional rewards on top of the eth reference rate assuming that eth reference rate is eth sticking rewards plus the me that became kind of the norm for most of the eth LST protocols um so obviously that allows Innovation to happen much faster anyone that has a new idea can compete with chain link and others that are already established uh middleware players in the space much faster and um yeah that's really the like open Innovation that triam the founder of aen was I guess aiming for um so these rewards uh basically they need they come by um actively validation services so you have now multiple uh protocols offering these services that we can see right after a few examples of it and uh those ones are going to offer services than to Middle uh middlewares uh layer tws and so on so so um that's one of the main uh benefits uh before that I think it's in very relevant to explain how you can restake so there is mostly two ways to restake uh one is uh what they lers calling integration under the hood and another one is over the top so under the hood it means native uh reaking so you run a validator node with 32 e you can then create the Egan pod which means you need to set the Ral credentials of your validator notes to the Igan pod so that Iger can slash you when if anything happens and and then you need to pick a Egan layer node operator so you can only select one by Egan POD at least for now um and then you will be eligible to uh earn additional ABS rewards uh but here the aan layer node operator is the one uh selecting and opting into the avss so you as a riser you cannot directly pick the avss so I think the most most easy analogy to uh use for for this is imagine you want to invest in equity and you can basically do it in two ways you can do stock picking yourself or you can decide to invest in an Equity Fund that is going to do some stock picking and then you like it or you don't if you don't like it you just select another Equity Fund so um that's important the resure cannot pick the AVS uh directly it's the a layer node operator that picks the AVS for you and they can select one or multiple ones if they do multiple ones that's obviously why this is called reaking right uh the second way to restake is through East lsts so there is uh currently 12 lsts being supported uh so such as you know Lio rocket pool stake wise um binance e coinbase e anchor Stater um fra uh liquid Collective not trying to forget anyone if I do sorry and there is also origin eth which is actually e LST pool so technically G is not limited just to e lsts it is also um technically able to support other things than eth LST as long as it is available on ethereum so origin eth which is a eth LST pool where you earn additional swap fees on top of e lses is one that is already being supported uh but you can pretty much foree that btcl LST is available on ethereum could become eligible in the future and that's actually something I discussed at East Denver withum and it did confirm that this is a possibility as long as it is available on ethereum um so in terms of the market I think it's pretty interesting to observe that in about a bit more than three years of eist right after its creation we have about 43% of all eth sticking that are in eth lsts but in about 3 months of fan lay uh there is already 56% right of the LRT is that you know I mean lrts are 56% of the market share of Egan L and it's growing pretty fast right LST LST market share is currently about 51 billion but uh EG is already 12 and it's still it is infancy right in April we are expected to see on Main net the ability to actually pick a Igan layer node operator because that part is still on test net so it's it is a evolutive uh protocol meaning that right now you can really just set up a Egan pod and deposit e list and that's it uh in April you will be able to then select a specific EG layer node operator that is selecting uh opting into some avss so then eventually you might get some AVS air drops or whatever um and but it does but it slashing will not be enabled uh so this is still something that will come only at a later phase and even if that happens there will be a g layer committee that might actually you know protect you from slash if there is a bug in the code you know that might be one of the circumstances where the comedy can actually Vil the slash right so it is still you know going to happen in quite some time and um yeah so in terms of the future uh my personal opinion is um igir is definitely going to be bigger than eth lsts why because institutions are still kind of not actively you know participating in engan ler is still super early uh it's only 3 months right not three and a half years almost like e lsts and um for aen layer um reaking it's also very modular meaning that people can get afraid about the additional slashing risk you're going to get involved to if you restake by opting into many many avss um however as an institution you can also op to one single ABS right so it's very modular the the type of risk you want to op in or not in the end of the day and I think yeah that this is is definitely uh going to grow in the future uh in terms of the use cases I'm not going to Deep dive too much into it so that way have time to to go deeper into the lrts but those are the let's say official use cases that they going identified uh so those abs as right uh they will be offering Services I think one big challenge is are they going to receive uh organic clients right that are going to pay rewards to those avss because these avss they need to borrow trust right and uh they have they will have most of them a token obviously so that will give some incentives but we need to see right if then uh some organic you know clients are going to come uh so far the rollups that announced uh that they will they will be using 8 which is one of the you know the first and the main uh data availability layer uh AVS Service uh there are other ones so each one is offering uh specific services like decentralized sequence for espresso um but um yeah basically um as I mentioned before uh the node operators they're the ones picking the abss one or multiple ones and the reaker then will pick the the node operators um now about liquid reaking it's interesting cuz when you want to restake uh natively or restake your LSC on layer they are uh benefits additional rewards but there are also some limitations so uh you will will be subject to an additional 7day un Bunning period and then you kind of lose your composability right because then you need to choose between deal farming these lsts or reaking your LST on inan layer um so that's where the innovation of LRT comes um so to my knowledge there is about 20 to 30 LRT protocols you know on test net or on Main net uh and why is it so uh you know so popular uh because you don't really need to choose right right with lrts so if you deposit your eth or lsts into a liquid reaking protocol they're going to restake for you on a and they're going to give you a received token which allows you to get secondary Market liquidity for the LRT so if you don't want to lose uh to wait seven days to unstake from Megan layer you can just sell the LRT token in Defi and uh and composability is also important because then you can continue uh to yield Farm potentially your E RTS and earn additional rewards so we saw the same 3 years ago uh at December 2020 um you know when um you could able you could be able to uh earn sticking rewards on top of eth you had to deposit 30 to e be a validator and but then you're kind of losing your composability at the time you had many e yield farming rewards right you had to choose between both and you know then e LST came up and now it's the same with LRT however there are significant ific differences is an additional complexity with um elrt and as a protocol things that you need to manage um so there is obviously additional slashing risk so what is the risk mitigation measures that you're going to take as a elrt protocol is pretty relevant uh also not all abss are equal some abss might have super friendly slashing policies others might have more less difficult I mean less easy slashing uh uh policies where they will you uh depending on whether you meet certain requirements or not and um yeah and then you need really to see if the token that you're going to receive right is going to be eth if it's eth it's easier to Auto compound if you're going to receive some new token you need to assess is it liquid how easy can I sell it or not and then you need to potentially self-limit yourself because if you are getting 50 ABS rewards right in 50 different tokens how do you compound this it's going to be challenging so then are you going to decide to [Music] self-restricted Auto compound this uh or are you going to decide to come up with some different mechanism for the distribution of rewards uh so the these are all still open questions right um um and I don't think any eert protocol specifically take some commitment right into how they're going to do it because it depends on Aon L also what they're allowing you to do or or not uh there are currently in this is what our Venture studio uh tacos laabs uh classified like three types of lrts uh which is different than lsts where they're mostly very similar uh but here there are actually significant differences in terms of risk that you are taking so the first one is native lrts so that one will be um the same as ethery which is the big one so far or Genesis LRT for for instance so the native LRT is uh really you get the eth fundamentally you're like a eist protocol so you need to pick some validators delegate the validation keys to them the extra step is that you need to create one or multiple Egon pots to delegate to one or multiple Aon layer node operators opting in to one or multiple avss right um so level of transparency here is uh I will say you know pretty high uh cuz it's really native East you don't face additional cter party risk so you're not going to take the risk of flyo Rocket pool or any other LST um the second one is uh what we call isolated LRT so that will be like Egen Pai or Inception LRT for example so those ones tend to be very friendly towards lsts and very transparent and predictable in the way that they're basically telling you okay deposit any of the 12 LSS on layer and I'm going to give you 12 different isolated lrts depending on what you deposit so if you deposit sdes you're just going to get an isolated LRT of um s so that means you want to continue to trust Lio to get Beacon chain rewards and M and you want and then you're just trusting another protocol to handle the reaking part because for lstd protocols most of them except SW that didn't do the you know their tge are not creating native liquid raking because when you have a liquid staking protocol with hundreds of millions of TBL or even billions um creating a second product is a bit challenging and you don't really have the incentives to do so because if you have ethyl St and you create an ethy RT um imagine let's let's say Lio will do it well that Lio then doesn't really have much incentive because the tvl is going to be the same it's just going to observe a transition of the tvl from product a to product B and in the meantime it's more advantageous for them to just wait and see and maybe other protocols like Inception and agen Pai once you build on top of them they will capture a second TBL layer giving us value to a second token and that will allow them to be more competitive in the space uh right um and the third one is what we call basket based lrts uh so those ones are I will say the most um let's say uh disputable in terms of risk reward because they allow you to deposit any e LST or e as well and they're just going to give you however only one receipt token so here you're facing multiple counterparty risk however you're not earning additional rewards when compared to the two other LR LRT types because you're not able to earn for example swap fees like in the case of origin protocol which is a LST pool meaning you have multiple lsts in the basket but you can earn additional swap fees uh so that's not the case for basket based LTS because you cannot swap something that is being restake right uh however isolated lrts might eventually evolve through Partners or themselves by enabling a second product which is amm baskets and then they can actually allow people to trade those isolated lrts and so on personally I think the risk reward ratio will make more sense for amm isolated LRT basket and the basket based lrts so those ones are mostly um kelp uh and Renzo even lenzo is mostly native but they also have S and binance E that's the competitive landscape right now for the main ones so rals um be be careful with that most of the lrts do not allow you to un sake um except uh a few ones like efy uh Genesis Inception restake in Cloud um so if you yeah participate there um sometimes you don't have a like a a mention that you cannot un stake uh they will then just tell you just sell it on the secondary market and then you need to check if you have secondary Market liquidity or not so be careful about that because it's still it's infancy Egan and lrts um and yeah in terms of the biggest opportunities I'm just going to highlight one um in the raking panel I think we can discuss about more opportunities but I think one of the biggest one is the layer toes so if you compare L2 beat tvl with defama and how many e you have on each um Layer Two you see that on arbitrum ZK sync or Linea you have actually more eth then the total tvl counted on theama meaning that there is many eth not being actively deployed in Def applications on these layer tues and they're pretty much worried right now about aen layer because this is definitely something that will likely be very big and this is putting you into question do you want to keep your eth in linear or do you want to put it into Egan layer and those e can pretty much you know leave those layer toos very quickly so they're all very excited about e RT because it's a e LRT on a layer two is the opportunity to give you exposure to Egan layer and the layer two of your choice and obviously then you still have the composability benefits of you know applying your elrt in defi applications on layer tues as well um so that's that's it for this introduction about liquid raking uh hope you appreciated it uh about my background so we're really uh Venture Studio focusing on LRT F so any protocol uh doing liquid reaking we're willing to capture TBL from liquid reaking tokens so we advise we co-build uh to to help these protocols um yeah basically benefit from this uh New Wave uh that is a reaking thank you so much thank you Phillip and uh next stop uh we're going to have the reaking panel in a bit so so um yeah just setting up uh this is our reaking panel uh panel host is Ian right doing my name is uh Evan and I'm going to be the host of today's panel welcome everyone so for today's panel we have you know a distinguished um panelist that's you know these be innovators these guys might be real real experts and um we're really going to be focused on not only diving deep into the opportunity in the space but also address some key challenges that might be arising as well as just the general future and has like how it's going to be impacting the ethereum like uh ecosystem so why don't I start by having our panelists give a quick introduction you guys can also talk about maybe what protocol you guys are building uh briefly and as well as U maybe what company you guys are working for um hello again so my name is Philip Gonzalez uh founder of tagos labs LRT 5 inent studio uh currently we're actively building um two LRT protocols one that is native uh LRT Genesis LRT second one is isolated LRT Inception and a CDP protocol as well um which is originally for of Mada with the Omni chain savings rate uh cuz you know it's also important to build def on top of the reference rate of stable coins uh so that one is Davos and also advising a few other projects uh namely one that actually is on going to test net today it's called the Strom it's doing BTC liquid sticky on top of lightning Network hi guys my name is Maya uh and I'm leading marketing for Redstone oracles um At Redstone oracles um we are modular or oracles the quickest um growing on the market right now we specialize in um lsts and lrts and that's why I'm here on the panel today and right now we are securing 100% of the alert Market good morning everyone my name is Michael kisselgoff I'm the founder of Vault craft uh bdcraft is a defi infrastructure that allows you deploy custom uh defi strategies automated defi strategies within a few seconds um we're built on mainnet evm soon to be salana uh I've been in crypto since 2016 uh and Vault craft is my second vure started my first one in 2017 have a finance background as well as economics worked at credit s and sap in corporate strategy and uh yeah now I got sucked into uh lrfi awesome awesome so I guess to really kick off this panel you know obviously we discuss uh the overview of what problem um reaking liquid staking might be solving I want to dive a little bit deeper on sort of the the value that's still providing to the overall ecosystem so just just to start you know besides token incentives what kind of value do you guys think reaking liquid staking has for the future of ethereum yeah I can take that one um so I I mean I think the the main advantage is obviously maintaining your defi composability but I think there is more like complexity with aan layer uh than with e sticking itself so I think really managing this risk complexity and basically trusting the risk mitigation mechanisms of the LRT protocol it's really a way to get these additional rewards in a way where you don't really need to go through this additional risk assessment and you know understanding uh all the ABS exposure you have or not and I I think that's one of the biggest benefits that it has and maybe that's why in the presentation before we saw that the market share of lrts versus Egan L is so high 50 56% so far and on for e lsts on East staking it's 43% um I think this difference might be partially justifiable because of that additional complexity it's actually solving yeah I mean I have two thoughts on on what's happening with liquid reaking token so I I think lrts are are like one spoke of the wheel for for I layer and what that actually like opens up for what's going to happen when the IG layer ecosystem um it's essentially I mean just to like back up for a second I mean iay is a way that you can abstract away from the decentralized and trustworthy nature of of ethereum so lrts are kind of just like this one element that uh provides sort of like um access to to uh ethereum's decentralized trust um there's going to be a lot of other applications that are built on on top as well that you'll be able to concatenate with with lrts so I think that's like a a very big thing and then second thing is that that I don't see why uh you know the most of the state eth or most of the tvl naturally um moves over to uh aan layer because of the incentives that it offers yeah I think um I agree with the speakers um what I personally value in raking is um let's say trust efficiency if you can say that so repurposing the trust and for the rakers they can have additional yel than just taking if um and on the other side what we are as an oracle interested um in is actually gaining that additional security um and I can't say much uh right now but we are exploring and it's very interesting toping topic for us yeah so one you guys are saying you know you're utilizing some of the liquidity that's not being uh that's underutilized right now the second I kind of imagine how you know AWS uh block space these guys are really helping um you know FastTrack some of these startups that are trying to build in the blockchain space so it would be igen layer that's really helping um protocols launch really quickly that overall to me it resonates that long term this is going to you know accelerate some of the the crypto adoption that we're really looking for so in terms of maybe let's talk about you know obviously this is exciting but there's there's some sort of risk that's involved um let's talk about maybe starting with uh the underlying systematic risk that metallic had highlighted last year what are you what are your thoughts on some of that that's um that he addressed uh this is like you know overloading the consensus uh mechanism you know giving too much responsibility to the validator so I just want to hear everyone's thoughts yeah I I remember reading that blog post so I personally think it's a that positive what Ian layer is doing I think the the risk or the the the benefits outweigh the risks um but theoretically speaking because of what I layer can do in terms of how many new applications that can be built um via igen layer that definitely lends itself to providing more congestion to the network um and having sort of a negative impact um but I I mean I don't think really really anyone knows how exactly this is going to play out in a few years from now since this is like super early but I I think that congestion then also let's say you are a ABS um and you run into some issues and you want to Fork ethereum to solve your issue I mean I think leveraging the basically the social consensus of of ethereum might be a problem but I I I don't think it's that high of a risk okay so maybe let's activate audience here who doesn't agree with vitalic about overload loading consensus okay right to see so I think it's nobody wants so I think it's really hard to uh disagree with uh vitalic and like the risk is there and it's quite realistic but I guess um I think Ian ler for now they are doing they have Security First approach and they are doing everything gradually and with Consciousness so um I think that's the only way to move forward to be uh aware of this risk and act accordingly yeah I think it reminds me also about eals I I don't think like vitalic where Foundation has been very excited you see you know E Liquid taking rise because obviously it it it poses some you know risk challenges I I think their approach with they Garian raking has has been much more open because they understand and they cannot really stop it it's just like the nature of people that I want just want to get additional rewards and more options even if they're taking more risk uh and it doesn't really matter for them you know if this is better for the greater good in terms of the risk of ethereum or not um so I think there is that dialogue honestly I even think that Aon layer has been a great um active player whether we like it or not and I think eum Foundation should be probably happy the way the manage the caps for essts because if they didn't have any caps on essts everyone will have restak their eths right uh from Lio for example and now we see that there is the emergence of so many eth RTS right there's even probably more eths already trying to do something than e SS so this is redistributing a bit the cards of staking and it's actually contributing in some way also for you know more decentralization um even though it's still concerning right the dangle probably will be bigger than Lio it's still a concern um but but I think they really Tred their best to accommodate with the let's say um fears I guess from ethereum foundation and um it's a very interesting redistribution of cards we're seeing uh but this is greatly supported by Egen lir um I'm not sure if they should be playing that right to remain neutal but that that's just how it is we'll see when the E LS caps will be uh uh yeah removed yeah so I I want to take a step further and talk about maybe we we address some of the challenges or risk maybe thinking about how can you guys like what strategies or what thoughts do you guys have on mitigating some of that risk like um you know is there any particular particular protocols that that are really aiming to solve that because like I'm thinking you know you got smart contract risk you got slashing risk you're you're stacking staked eth and then stashing you know all these different layers and these layers can go infinitely depending on what what the protocol really depends on so I just want to like kind of understand starting with you know you guys to to to address some of that risk I I think I can put it in context via what we're building at Vault craft I mean as soon as I understood what igen layer was I started thinking like how do I deploy Vault craft which is at at the on like at the infrastructure level very complicated let's say and how we built I think there is a good probability that complex Primitives are eventually built on top of igen lay which will I think increase the risk and as well as the congestion of the network I think there's very I mean we're kind of already seeing it play out with all of these rewards that are being and and this is again a very simple uh way of in terms of how I layer is being used right now I think the complexity is going to come later which is which is uh which is risky um and I forgot about the second thing I was going to say yeah I think about the slashing risk um like how they're going to mitigate slashing there is like multiple ways to to do it I will say three come to my mind right now uh the first one it might be diversification across multiple node operators um so for for that one some LRT protocols they are running nodes themselves or plan to do so uh because that grades them that gives them a bit more power right oh I have 3 billion tbll and you talk with the nvs and you're like ay how much security you want right so that those offchain conversations are honestly already happening and and if you want to have that direct dialogue with the ABS and basically negotiate offchain how much secur you need I can give you that much but I need that much rewards I think it's an interesting dialogue because there is no really Market Discovery mechanism because we're so early but I think those things ultimately they will need to happen like on chain um and if you want to have the dialogue you need to do it uh either by you run your own node operator or you need to have a node operator that just follows your abs strategy as a liquid raking protocol and they need to consider you as their like big biggest client and they're just going to do whatever you want want in terms of APs selection um so I I I personally think having more node operator diversification is better as a LRT protocol to reduce that slashing risk uh I will say the second one is U DBT technology from mobile and SSV when they come to your aan layer which I trust they're already building uh that so it will come sooner or later that will reduce slashing risk uh for sure and I will say the the third one what it might be onchain / Insurance protocols so for example Nexus Mutual I personally believe they didn't really have much success because they were trying to basically provide uh Insurance uh but fundamentally they were trying to pay insurance on top of eth and D which is they were assuming that the reference rate of eth and D was Zero now with positive interest rate we realize that the reference rate of D is not zero now the increase it to 15% actually because uh defi yields are higher than trfi uh as as of like the last couple of months and E the reference rate is e lsts so I definitely think there will be you know Insurance protocols that will be dedicated to lrts and they will be paying an insurance premium on top of e lsts uh to protect LRT users against slashing risk uh so I think that's the three measures we can do about the slashing that will be um yeah helpful for the ecosystem so what do you guys think about concentration risk in in general like you know the the problem is that everyone is looking to deploy some that stay deep into IG layer um how do you guys do you guys first of all do you guys think that's going to be a problem uh second of all like how do you guys think uh you know what's the best move moving forward to kind of like um address that that centralization risk I think like Ean is like the M the itself is the main cause of decentralization again it's just a set of smart contracts secured by you know multi6 but I think that's why sham is also saying he's aiming to be kind of part of ethereum long term because yeah then if you're com comfortable about the ethereum foundation right being able to do you know certain things on ethereum uh then Onan Lage will not be different so if they achieve that kind of evolution um yeah in that in that case I think actually that with ethar it will be much more diversification and so many infinite possibili to get different ads exposure that it's actually going to contribute for more decentralization in some way but right now the biggest concern is uh IG L itself being a point of you know centralization uh in the short term for ethereum all right all right so maybe let's switch a little bit of gear you know we discussed the challenges I want to hear what are the current exciting opportunities you know maybe potential Trends narratives or even protocols that are doing a really good job in this in this space I I think the app specific chain aspect of what a layer allows is going to become very interesting especially let's say a year from now uh I mean I I can talk a little bit about like what we're looking or exploring to do for for bdcraft and in terms of creating our own restak rollup so literally leveraging like lsts to create our own app specific chain uh and the the ability to do this in the the different I guess like access points via alt layer or I'm not or I think perhaps Dimension is doing something similar in terms of like rollup launchpads uh I think you know in 2017 when you were to launch a token it was you know it was like a brand new great cool new thing was pretty easy to do the fact that you can launch your own rollup right now and be sort of in control of your own destiny more so in like fee structure you know that's something that's like very interesting for us and the fact that you can actually even do that very very easily obviously if you have the um engineering capabilities um is is it's basically basically groundbreaking and um it's it really hasn't flourished yet so think about what that looks like one or two years from now when you have many more applications like Vault craft building on their own app specific chain uh and think about what that will do for for ethereum and overall for the like the centralized and trustworthy trustworthy um nature of of the network um I think I would mention two projects here to areas so first of all ethery I'm personally a big fan um the native reaking uh they introduced and they are doing really amazing job there um another thing that also mentioned before but that we are interested uh as an oracle is uh reaking uh being used in oracles and that we actually uh how we imagine that is um through staking we can create much cheaper uh feeds being even five times cheaper than the market Solutions right now so I think that's that's very exciting especially from the protocols perspective um because protocols they need to cover a lot of Fe when it comes to um Oracle feeds and reducing the costs that much on monthly basis um that would be a big advancement yeah I think about the rollup as well um you don't necessarily need engineering capabilities if you trust rollup as a service uh companies like Caldera is also one of them uh even inker I think they have an offering about that um but I think what opportunities maybe switching a bit more into the LRT part is as I mentioned before in the in the discussion uh the the layer tues so many so many East just there basically not willing to be exposed to just another Fork of compound and with LRT it's a much more comping opportunity there is 4 billion of also U SD on a so I think when lrts get mature and you know let's say the market will stabilize into LRT protocols give you an insurance premium of let's say 1 two 3% more rewards than ESL STS then you will see definitely LRT Loops happening right basically people collateralizing LRT and borrowing STS which increases the lending interest for stes because nobody is really borrowing SES in these U lending protocols so I think that's like very interesting opportunities that we we will uh probably see and that will give you know much more choices in terms of uh people earning yield they will no no more be just you get exposure to eths or E RTS you can actually land your eth St and you get some sort of heal in between um so I think that will they we will see much more diversity of use cases uh for ethr and uh yeah that's that part I think it's uh one great opportunity for many Builders uh that want to build defy in that space yeah I'll just picky back off of that given that I'm a heavy dii user uh the fact that these lrts are tokens um and the nature of dii generally takes these tokens and puts them into money markets or whatever primitive Perpetual protocols um you know this is something that's naturally going to increase uh in terms of volume velocity over time also one big opportunity I think is EFS so as you know Circle you know is putting these Fiat right into shortterm corporate bonds they're not sharing right the the coupons from these bonds with the end user in defi um so imagine if e ETF is doing the same with some sort of white label e LST or even eth RT and keeping the yield for themselves the opportunity is just too exciting for them not to to do it uh as long as the regulatory landscape in their jurisdiction allows it to do so um so I I think that will be also like another massive opportunity uh yeah in the future so with more potential institutions trying to come in I kind of want to kind of talk about how do you guys see this space continue to evolve over the next five years uh obviously um you know five years in crypto time is almost like maybe 50 years but you know I just want to get a better understanding uh like how how do you guys think this uh will continue to evolve you know we talked about barriers obviously but uh want to more focus on some of the opportunities so I don't have a clear answer what I'd like to see in couple of years is actually if I um being more like regulated in a clear way um not SE uh giving different um opinions every other month uh and still recently I think I read the news yesterday that still investigating ethereum as a security again um so I think we need Clarity and I think we need regulations um which going to give the users more safety and maybe just focus on reducing the amount of rack PS and hacks not necessarily uh what's happening right now as someone that let's say deals with the institutional side trying to get institutions into defi I I would say the the problem with the institutions um mostly exploring things out of just staking eth is that their smart contract risk they just don't want to deal with it um and if they can just earn yield on uh on eth and long it at the same time that's great cuz you see what's happening with e so it's just a great play for them so if you want that higher you want higher returns because you want higher risk they you can going to defy but ultimately um you know with everything that's happening let's say in the west and you know the the regulatory in unclarity there and how I would say more of the the capital that is being deployed is on as on the Asian side I think there's definitely this Geographic kind of like shift that that's that's happened over the last year and we continue to to go on depending on whoever wins the election or whatever the political landscape is going to to be in the US um after this year but um we're definitely discussing institutional involvement in igen layer on a stage probably one of the first conversations like this is this is super early I I mean I think I hope that you know let's say more funds or asset managers that understand the the potential of igen layer or essentially what they they can earn with with igen with lrts let's say um will increase in adoption over time I think it will I mean I don't know how long it'll take but uh I mean eth as itself is just a great asset to to have in your portfolio yeah I personally think in the next five years um we we'll see like apain everything Trends where I think one big concern uh everyone might have is that SD is so big but it's secured by a multi and all the def apps are honestly like dependent on a multisig right so the only way to make it economically viable I think is through Igan is then lsts protocols becoming an app chain itself because I think there is a great guideline from the Swiss regulator about staking where they're basically saying um if I remember well the the main approach that they have is like a validator is like a custodian and he needs to follow the same regulatory aspects unless if they there is a few exceptions and one of these exceptions is like uh being a proof of stake system uh being able to have an un buning period and having a slashing mechanism and yeah basically I'm like generalizing and simplifying a lots but if you have basically slashing um and true validators in instead of a multisig it's more than likely uh what we can say now from that U basically uh guideline from the Swiss regulator uh that you might eventually be able to escape some sort of custodian regul regulation right so the only way that is viable is through aan layer and and then every yeah if application will have to become some sort of app chain uh to be able to be compliant and that's the only way they make it economically viable because if Lio is taking 10% fees on the eaking rewards they need to distribute half to the node operators there is only half left is it enough to pay uh validators to secure all of this it's not going to be able to acquire as much stick assets and Trust than the amount of tvl is it has and only aegan layer can uh I think at this stage offer that kind of opportunity and other opportunities is I don't think there will be like a monopoly of fan layer there is also Babylon you know knocking on the door with BTC and so on so I think we'll see other type of raking protocols happening uh where they will try to uh basically attract um trust from Bitcoin and not only ethereum um so yeah I think that's how things might evolve well I I do want to follow up on that and and ask you like further down the line what do you think the the end game is and it's just just like a real quick you know we talked about five years you know we talked about how you guys look in the future but like what what's the end goal for for this this space like what what are they really trying to achieve at the end of the day I personally believe that cryptocurrency is I mean the the the the blockchain decentralized nature of it is is a vortex for Fiat um you know I think it's still the beginning stages I think things like igen layer that help abstract away from the complexity of of uh of block chain or decentralized trust are things that will increase adoption of the industry overall um like Felipe said before I mean you don't need to be an engineer to launch your own rollup anymore you were if you were to say that five or six years ago I mean that we wouldn't even talk about that so the fact that that's even a thing now is is very impressive so a year from now and then on top of whatever AI if anything is actually going to happen there and it's not just vaporware um in addition to everything that's happening I'm more excited about on the on the defi side and how that affects things um you know I think uh things will look pretty pretty interesting yeah I think like one one great Prospect it will be to provide ethereum like security for any sizable meaningful defi application is definitely something that will be very beneficial mostly you know regulation is going to come at some point in the next few years if we're really looking at the long term it's definitely you know not going to be okay to be secur securing billions with the multisig of nine people uh that you don't even know and you don't know where they are so um you know this is unavoidable I think and the only viable way to do it is really through uh in my opinion so far through reaking U so I think that will be a great ambition right will the big protocols having uh the possibility to have ethereum like security um eventually Bitcoin like security uh might be desirable um but I see now only these two assets right that can pretend to be kind of save Heavens right in terms of acquiring trust uh and they have enough liquidity and they're big enough what do you think about like multi-chain kind of like leveraging security from all different type of chains then do you guys think this is viable um you know you discuss like the the benefits of like ethereum and Bitcoin trust but what about leveraging the trust from all these like different other chains I I think you you technically can with certain things I mean let's say as a as a defi user you want to I don't know let's say Bridge from arbitrum or optimism I mean there are certain things like Wormhole that allow you to to leverage different blockchains and and you're leveraging them because you trust that the the the consensus and the mechanism works there so I we already live in this world actually you just don't know it really I mean we don't really talk about these things because we're that's you know very much like deep in the stack but's say but uh I mean I think you can kind of quantify it with how much let's say volume is being bridged and I mean these are all different chains that that we're using so we were very much there yeah and I think the explosion of Ras uh protocols actually showed that that we and this is also also a vision of Celestia that the word is going to be multi-chain and technically um every protocol is going to have its own up chain um and there there are Stacks to build that right now with Caldera conduit gelato Etc so let's see how it evolves yeah yeah interrup ility also of layer twos layer 3es you know all of that will be also very important um in in my opinion and in terms of like let's say I'm I'm someone that's looking to get into reaking what are some of the I I guess what are some of the things that I should be watching out besides the risk like how do I determine where exactly to put my state e or liquid steak e okay so um um when we were talking about risks I believe there are three categories which is like from the protocol side the user side and like external let's say Regulatory and I think when you are a user um and it's not happening enough uh we don't actually don't educate ourselves so as users I think not every know everyone knows that there are three types of um alertes that each has a different risk profile and we're just looking at numbers like the yeld the the points Etc so I think the the ma majority uh of people should uh educate themselves more and attending the panels like that it's fine but also reading the docks of each protocol they are um going to use um and that's why we also released uh an extensive report report a report on staking and reaking um so you can understand each protocol better and the whole mechanism of reaking better yeah I think at this stage is still still so early aanay so basically it's not clear even for the LRT protocols themselves what type of ABS indirect exposure they want to have or not it's still too early so the only thing as a user we can do I think is really clearly understanding the three categories of LRT I personally think it's maybe better to avoid the basket based LRT just because you don't really get additional uh rewards for the additional counterparty risk that you have uh unless if they change over time um and yeah I think that the two ones that people uh should probably focus on is the native one so if you become you believe you know ethery is going to be you know the the next SL though and you feel comfortable with that and you like it I think that's completely fine and if you want to continue to trust whatever LST you like and just trusting other protocol to do the raking part on top of the LST of your choice I think this is the most transparent approach that you can uh you know benefit from um then I think it's still too early to then uh discuss and see how effectively the risk mitigation mechanism every protocol will have it's still a bit too early in my opinion to make the Judgment so only be familiar with the LRT type and and make your choice if you want to participate in a in the LRT space yeah I don't have anything to add all right so in terms of like how you guys are looking at the maybe the market today um the Dynamics you guys see that there's more ABS than resters like do you guys see like there's a balance um is is there a balance at all or is there like an imbalance well I think many people think that we got ahead of ourselves with raking I think there is definitely more reaking assets than you know there is not even AVS rewards right this is all based on points so you know I I think on the AVS side and reaking rewards and everything it still needs to to catch up but that enthusiasm just is an acknowledgement that the market is expecting this to be very big and but I think right now to be fairly honest there is a like a big disproportion of many more rakers uh than actually you know avss and uh protocols planning to consume these AVS Services it's quite easy to to restake I mean we we build vaults for for LRT protocols that make it even easier um to do so we have a vault for for CP where you can mint ethx and then take ethx to Mint RS e and you do it all in one click it's all done through smart contracts so it's quite easy to to restake um you know an ABS is a sort of you know if you're building something like hyp specialized like a decentralized men pool or something like that I mean you know that's not something that you can like sell uh in one click right so it's uh the two different things I would say yeah and I think the Cs for Risk Takers actually speak for themselves got it got it all right so you know obviously I I think um I wanted to just check in to see if you guys have anything additional to say about you know maybe something that we didn't cover just yet but if not I yeah let me know yeah I personally think it's going to be very challenging and interesting um how the ABS rewards will come will it be in uh Native eth will it be many tokens many different like ABS tokens uh how do you autoc compound it will LRT protocols aim to autoc compound or they will try to come up with different mechanisms because it's very challenging to autoc compound potentially 50 ABS rewards so I think those are some of the active discussions happening with LRT protocols and uh yeah I think it just depends on maybe two things like whether layer will develop something to make it easier to Auto compound that might influence your decision another like option it might be that um ABS is maybe they will just come up with a general consensus where they can attract more trust if they pay in eth than than if they pay in their own token and maybe there will be then a like a a market Trend where everyone is going to try to have super friendly slashing policy and just being e because that's what allows you to attract probably the biggest amount of e restate assets and the biggest amount of trust that the most Capital efficient way so uh I think those are questions still um you know that will be very interesting to see how this evolves it eventually I mean as someone that's helped LRT protocols like build their own vaults I mean Point systems are very much used to incentivize or for like user acquisition so I think in the short term it's a bit concerning how that's all going to play out but in the long run if that's going to attract that many more let's say users resters um and if those if that system is essentially sticky I think uh that's that's what's really exciting so I think like in the short term I'm kind of curious how it all plays out in the long run I think it's a you know net positive yeah um I would really uh like to finish uh with inviting you to read the report that we prepared I think it's um full of uh very useful knowledge and Analysis of the alert uh protocols right now uh in the market um so yeah inviting you to redstone. finance to check it out all right so hope you guys learned a lot about the the the space today I want you to one thank you everyone for joining and also the panelists for for providing all these useful insights hope you guys learned a lot and um I'll have the the host take it away thank you