Enhancing Restaking with InceptionLRT

October 27, 2023
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Innovation is no stranger to the blockchain realm. Staking, a fundamental blockchain-related concept, has witnessed transformations like liquid staking that benefit the entire community. Restaking is next in line, set to disrupt the staking ecosystem to relay perks to all stakeholders of the staking ecosystem.

The Restaking Primitive

Restaking is a revolutionary utility introduced by EigenLayer, enabling applications beyond the influence of the Ethereum consensus layer to tap into its robust PoS security mechanism. Ethereum stakers – validators and delegators – can use their existing PoS deposits to validate transactions on Ethereum non-native dApps called AVSs. The AVSs harness high levels of security while stakers gain rewards in addition to their Ethereum block rewards.

However, the present state of restaking with EigenLayer is not perfect. It is understandable because the protocol brings a primitive concept. Nevertheless, primitive implementations on blockchain networks can be improved and expanded exponentially - the capability often referred to as Money Legos. InceptionLRT, an advancement in restaking, betters the restaking primitive and looks to trigger large-scale restaking usage.

The Issues with Restaking Conventionally and How InceptionLRT Solves Them

Restaking on EigenLayer exposes validators to slashing risks. The protocol's slashing mechanism ensures cryptoeconomic security, preventing validators from hijacking AVS networks. Restaking by delegating assets to validators involves trusting they will always act in good faith.

However, validators not behaving in line with the rules set by AVSs will most definitely affect delegators by having their accrued AVS rewards slashed. Additionally, validators can choose to secure several AVSs, needing them to comply with the rules of all the applications they validate. Delegators are thus exposed to increased reward-slashing risks since any AVS can implement the slashing mechanism if validators do not operate according to their rules. Moreover, slashing impositions can prevent nodes from further validating AVS transactions, interrupting the collection of AVS rewards for delegators.

InceptionLRT addresses slashing risks adequately by providing extra layers of safety to delegators restaking their LSTs (liquid staking tokens) on the platform. InceptionLRT thoroughly examines EigenLayer operators through a rigorous whitelisting process, ensuring that delegators get to choose from the most trustable node operators. It implements a scoring system for operators that is performance-, quality-, and governance-based.

The scoring system lets delegators know of the most trustable operators on the platform, restaking with whom delegators can trust that their rewards will not get slashed and reward generation will stay undisturbed. InceptionLRT also provides insurance to whitelisted operators for worst-case scenarios when their restaked assets get slashed. So, LST restakers on the platform do not have to worry about forfeiting their rewards and witnessing breaks in reward generation during undue situations.

Another EigenLayer issue conquered by InceptionLRT is its illiquidity. Restakers on EigenLayer get subjected to a seven-day unbonding period when requesting to withdraw their staked assets. It exists over Ethereum’s unbonding period of three to seven days. On top of that, EigenLayer does not offer liquidity through receipt tokens, a concept fashioned by liquid staking protocols. So, users get tied to illiquid positions that require days to move away from.

InceptionLRT tackles the illiquidity problem by providing receipt tokens labeled Liquid Restaking Tokens (LRTs). Restaking on InceptionLRT can be accomplished by delegating some of the most popular LSTs, which include stETH, rETH, and cbETH. The platform reciprocates the LST deposits with instETH, inrETH, and incbETH, respectively. These LRTs overcome EigenLayer’s liquidity risks by tapping into DeFi composability.

They can be utilized on DeFi protocols on Ethereum and its layer-2 blockchains, engendering several use cases. The first use case is swapping them on liquidity pools for the tokens representing the initial stakes of delegators, making near-instant access to their deposited LSTs possible, which nullifies unbonding periods on EigenLayer and Ethereum. Of course, LRT swapping will extend beyond switching for LSTs. Restakers can exchange their tokens for any other based on the kind of token pairs existing on DEXs.

Moreover, LRTs will be usable on DeFi protocols for yield generation. The use cases associated with Inceptions’ LRTs are endless as they will be implemented in several dApps, enabling restakers to profit from lending, liquidity provisioning, and yield farming. Restakers can harness the fullest potential of DeFi to earn rewards from multiple layers – PoS staking, restaking, and DeFi.

InceptionLRT Looks to Lead Restaking Adoption

By improving on EigenLayer’s restaking application, InceptionLRT is becoming the frontrunner in the restaking landscape. It simultaneously makes the staking and restaking processes liquid and takes reward accrual to the farthest lengths by making DeFi use cases accessible. With that, restaking will undoubtedly witness raging traction soon.

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