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EigenLayer Announces New LSTs and Restaking Changes

EigenLayer, the leading Ethereum restaking protocol, has announced some major changes to its staking ecosystem, including the addition of three new liquid staking tokens (LSTs) and the removal of individual caps on LSTs. The protocol also introduced a new approach for allocating restaking points, which aims to promote decentralization and fairness.

What is EigenLayer?

EigenLayer is a protocol that allows users to deposit and restake ETH from various LSTs, which are tokens that represent a claim on staked ETH and rewards on other platforms. By restaking ETH, users can earn additional rewards from third-party networks that are secured by EigenLayer’s validators. EigenLayer’s vision is to create a cross-chain staking network that leverages the security and liquidity of Ethereum.

EigenLayer has raised $64.5M in two funding rounds backed by prominent investors such as Blockchain Capital, Coinbase Ventures, Polychain Capital, and others. The protocol is preparing for the mainnet launch of its Operators and EigenDA, which are the core components of its restaking system.

What are the new LSTs?

EigenLayer will add three new LSTs to its restaking ecosystem on February 5th, 20:00 UTC. These are:

  • Frax Ether (sfrxETH): A synthetic LST that is backed by a fractional-algorithmic stablecoin, Frax. Users can mint sfrxETH by depositing Frax and ETH to the Frax protocol.
  • Mantle Staked Ether (mETH): A LST that is issued by Mantle, a decentralized staking platform that offers low fees, high rewards, and instant liquidity. Users can stake ETH to Mantle and receive mETH in return.
  • Liquid Collective Staked Ether (LsETH): A LST that is created by LiquidStake, a service that allows users to borrow USDC against their staked ETH. Users can stake ETH to LiquidStake and receive LsETH and USDC loans.

These new LSTs will join the existing ones, such as Lido Staked Ether (stETH), Ankr Staked Ether (aETH), and StakeWise Staked Ether (swETH), to provide more options and diversity for restaking ETH.

What are the restaking changes?

EigenLayer will also implement some significant changes to its restaking parameters, which will affect how users earn restaking points and rewards. These changes are:

  • Removal of the 200k ETH individual caps on LSTs: Previously, each LST had a limit of 200k ETH that could be deposited and restaked on EigenLayer. This cap will be removed, allowing users to restake any amount of ETH from any LST, as long as the total value locked (TVL) of the protocol does not exceed the global cap of 1M ETH.
  • Introduction of a new approach for allocating restaking points: To ensure a more equitable distribution of restaking points and rewards, EigenLayer will cap the future restaking points that can be earned by any LST, LRT (liquid restaking token), or individual deposit at a maximum of 33% of the total future issuance. This means that no single entity can dominate the restaking ecosystem and receive a disproportionate share of the rewards.

These changes will not affect the future payments from AVSs (alternative validator sets) to LSTs, which are determined by the performance and security of the validators.

When will these changes take effect?

To incorporate these changes, EigenLayer has rescheduled the next restaking window, which is the period when users can deposit and restake ETH on the protocol. The restaking window will be unpaused from February 5, 12 PM PT to February 9, 12 PM PT, with the new LSTs and no caps for any LST as described above. After this time, all deposits will again be paused until the next restaking window.

EigenLayer stated that these changes align with its ongoing commitment to security, decentralization, and a robust staking environment. The protocol also encouraged users to get ready to engage in these exciting opportunities in ETH restaking starting February 5th, as this transition signifies a major shift in the restaking landscape.

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