How will the LRT track catalyze the Ethereum ecosystem after the Cancun upgrade?

With the completion of the Cancun upgrade, Ethereum and related ecosystem tokens have shown strong performance recently. Modular concept projects and Layer 2 projects are successively launching their mainnets, further boosting market confidence in the Ethereum ecosystem. The liquidity re-staking narrative has attracted capital attention due to the explosive popularity of the EigenLayer project.

This article will focus on the LRT track ecosystem, detailing its current situation, opportunities, and future. Currently, there is serious homogenization in LRT projects, with most not having issued tokens. Projects with differentiated routes such as KelpDAO, Puffer Finance, and Ion Protocol are viewed favorably. It is expected that the LRT track will grow rapidly in the future, but only a few leading projects may stand out.

LRT Track Background

The upcoming upgrade in Cancun is driving the price increase of Ethereum ecosystem tokens. The launch of modular and Layer 2 projects on the mainnet further boosts market optimism.

Liquid staking occupies an important position in the Ethereum ecosystem. The concept of "re-staking" has gained attention with the rise of EigenLayer.

"Re-staking" allows users to re-stake their staked ETH or LST, providing additional security for decentralized services on Ethereum and earning extra rewards. This is how the LRT project was born.

LRT Evolution Path

LRT is the "re-staking certificate" obtained by re-staking LST. Its evolution path is as follows:

1. Ethereum native staking: Under the PoS mechanism, validators stake 32 ETH to maintain network security.

2. The LST protocol was born: lowering the staking threshold and releasing liquidity.

3. The emergence of the Restaking protocol: allows LST to be staked on other networks to earn more rewards.

4. Birth of LRT: Re-staking LST to earn rewards, while issuing "Re-staking Certificate" to solve the liquidity lock-up problem.

5. Pendle protocol empowers LRT explosion: provides LRT financial operation scenarios.

LRT Track Ecology

( EigenLayer - Re-staking Middleware

EigenLayer is a re-staking collective on Ethereum that allows ETH stakers to verify new software modules on the Ethereum ecosystem. Its core concept is AVS) Active Verification Service ###.

Currently, there are about 13 AVS projects, such as EigenDA, AltLayer, Near, etc. These projects mainly serve the security, scalability, interoperability, and decentralization of Rollups.

( Ethereum LRT project

There are about 15 LRT protocols on Ethereum, 9 of which are online and 6 are in the testnet. They are mainly divided into 3 categories:

1. Liquid-LSD Restaking: Unifying the management of LST into an external Restaking protocol.
2. Liquid Native Restaking: Provides small amount ETH node services.
3. Optimize based on Eigenlayer to provide security and validation services.

![Cancun upgrade completed, does LRT (Liquid Restaking) catalyze the Ethereum ecosystem?])https://img-cdn.gateio.im/webp-social/moments-7aa2099a97d758eb9f9bd392daa3cdb9.webp###

Main projects include:

• Renzo: Optimize Eigenlayer process to help users build portfolios. TVL $777.7m.

• KelpDAO: LRT project supported by Stader Labs, providing AMM liquidity pools. TVL $718.76m.

• Restake Finance: The first modular LRT protocol on Eigenlayer. TVL $15.5m.

• Puffer Finance: A liquidity staking protocol that reverses penalties, lowering the re-staking threshold to 2 ETH. TVL $1.40b.

• Projects like Swell and Ether.fi, which originally focused on liquid staking, have also transitioned to the LRT track.

Future Predictions for the LRT Track

The LRT track is a rapidly growing niche market, but the projects are severely homogenized. It is expected that in the future, only a few leading projects will stand out.

Risks include penalty risks, centralization risks, contract risks, and the accumulation of multi-level risks.

Future Opportunities:

• Multiple combinations with other DeFi protocols
• Enhance security using DVT technology
• Multi-chain expansion

Overall, the LRT track has a promising development outlook, but risks should be heeded and opportunities should be seized.