Amitej Gajjala - Pioneering LRT: A new liquid staking paradigm

Transcript

hey everyone thanks a lot nxo for the quick intro uh thanks everyone for joining today uh here I'm here to talk about uh uh liquid reaking uh a new D5 Paradigm that uh we building I'm not going to talk a lot about uh kelp which is the protocol that uh that is building this liquid reaking but I'm generally going to talk a little bit about the evolution of staking liquid staking and the next Paradigm in line which is liquid reaking U just for quick context everybody uh like the entire uh ethereum like like in 20 2015 is when eth emerges as the global alternative layer for

Value exchange and value Network and in 2020s when uh Native staking was introduced uh with obviously with a minimum of 32 e anybody could spin up their validators to run an E3 node uh and then Sim like in similar time frame liquid staking was introduced which kind of democratized staking kind of like the Pioneers include Lio rocket pool Etc uh and then in 2023 is when E3 staking was introduced plat reaking platforms like igen layer and a couple of other versions of igen layer are really making this reaking ecosystem popular um and the the essential concept of it is for

those of you who are not familiar with the reaking and the associated networks the the the essence of the idea is to kind of reuse the decentralized trust network uh of stake teeth in uh in in providing security for other daps or applications or protocols that want to actually use decentralized uh build decentralized networks so let me get into a little bit of details uh this like I'm going to skim through this very quickly you're all probably familiar with the fact that how liquid staking democratized uh staking for everybody now introdu like with liquid staking we don't need 32 eats to kind of

participate in staking so these guys really kind of brought down the barriers for staking for everybody and then the additional two advantages of liquid staking was it was very Capital efficient because people could participate in defi earn additional rewards yields Etc and then obviously this brought uh uh liquid staking got liquidity to Stak assets uh this was very important back in 2020 when there was no withdrawal time period on ethereum yeah U so just like how ethereum kind of offers a a global alternative for building Financial applications reaking kind of takes it a step further because of the additional

advantages and the potential uh applications that it could actually bring in uh so essentially this Slide the way yeah so basically the idea of reaking is that there is billions of dollars of stake teeth that can be reused for providing security for other applications daps or any kind of uh any kind of l2s or potentially multiple other applications like oracles or applications needing programmable slashing Etc so they are the prime candidates that can use this reaking networks like IG layer and what we are

kind of building is a liquidity layer on top uh the reason why we are building that uh is because we believe there are going to be a lot of challenges with with regards to liquid uh with regards to reaking as a paradigm and some of those challenges are highlighted here uh one is this is going to create extremely comp licated uiux for a lot of users because as a user when you're uh when you're actually reaking your ethereum or any of the liquid Stak assets you're going to be reaking those with obviously two major players in the ecosystem the first one are essentially the validators who are validating in a on a reaking platform like igen layer the second ones

are all these Services which includes the daps or applications that are being built on top of uh these validators on the reaking ecosystem so now as a user uh you have to actually choose between node operators and the applications that are participating in this reaking ecosystem that really complicates the uh user interactions uh so that's one significant barrier to that that's one major barrier to reaking adoption that will exist in the long run the other one is obviously when you're participating in uh in reaking across multiple applications you're going to be rewarded

in multiple different tokens so for example protocol a rewards users in E protocol B rewards users in uh in stable coins and protocol CDN in their own native tokens so there's already five different tokens that users have to actually claim pay gas fees uh to actually like harest their rewards so this is going to make their experience extremely complex the Third one is obviously uh Lo losing liquidity when users restake their e or lsds there is going to be a nonbonding period that is going to be imposed by platforms like ion layer U so there is an instant loss of liquidity that users will face so all

of these three major barriers exist in terms of adoption for eaking though there is a significant frenzy around ion layer air drops Etc that attracted a lot of capital but if you kind of remove the noise around air drops so these three are going to be the major challenges that users will face in the future when choosing reaking platforms and how do we solve these uh that is where we believe uh lrts liquid restake tokens Can elegantly solve some of these along with some of the risks and challenges that some of the reaking platforms are going to create in the future for ethereum so how do they how do how do we solve solve it uh essentially when users take their

restake their ethereum or restake their lsds we're going to issue a simple receipt token uh for kelp da it is called RS uh so now know that restake token represents the underlying ownership of the restake assets and is also eligible to receive reaking rewards like air drops Etc of the avss that are going to be using these reaking platforms so that's going to be like extremely capitalist efficient for the users because uh they're not only going to get e staking rewards but they're also going to get e reaking rewards along with airdrops Etc uh and then on top of that they will be able to use

this token on Dy platforms like a etc for collateralizing or for providing liquidity across curve balancer right so it is going to be like probably uh liquid staking on steroids now it is also going to create uh uh better user experience because the like the LRT platforms are going to abstract the complexity of claiming these multiple air drops in different types of tokens and give those to users in a single transaction so that will take away the complex user experience that reaking is going to introduce and because RS is just like any other token like re or s or eex Etc it is going to have so Protocols are going to build

liquidity on amm and potentially on centralized exchanges also in the future that is going to unlock liquidity so they don't have to face any kind of barriers to barriers in terms of withdrawal periods or unbonding periods so that's so El lrts are going to elegantly solve the problems that are created by reaking while also enjoying the benefits of uh these reaking platforms any just want to pause a little bit cuz I covered a lot any questions so far oh it doesn't move

next I also want to cover some of the risks that exist with uh reaking networks like I layer that we believe lrts could potentially be uh able to solve some of those risks one of the major risks that uh is highlighted when it comes to uh reaking platforms like I layer is slashing related risk because this introduces additional additional potential slashing risks uh on users stake teeth the way lrts could solve this is by selecting a bunch of operators who are well known and uh would have the have the network infrastructure necessary to run uh staking services in a in a much more uh

uh in a much better way than uh in a much better way so that is going to limit the slashing risks for users the other potential uh risk that reaking is going to introduce is uh centralizing the network a lot where all the users are going to choose like brand named validators for reaking their ethereum but with uh protocols like K da and other lrts they are going to limit the centralization risk because they are going to allocate the restake capital or restake ethereum from users deposits across multiple operators and uh once there is a lot more clarity in terms of the AVS or the reaking services that are being U being developed or being or the

services that are utilizing the restake assets uh like way Ways and Means to sort of onboard operators permissionless is also going to be reality with with the required bond amounts so all of that all of those uh checkpoints in place will limit the centralization risks associated with uh uh reaking networks right and the other one is obviously impacting social consensus since I'm I'm sure some of you have read Vitex paper on how reaking is going to burden social consensus for ethereum one of the ways uh and means to sort of limit this risk is by selecting services or applications

that pose limited risk uh to users Capital so that uh need for a hard Fork is kind of minimized in the future so that's how we believe LS can potentially solve some of the risks with regards to reaking and that is that those these are some of the mitigating factors we are considering while building our solution and the kelp Dow and uh yeah so this is our Twitter handle if you can if you want to follow Kel da happy to answer any further questions thank you guys if nobody has any questions we're

going to take a short break I think we've got five more minutes until the next speaker