Isolated Liquid Restaking Tokens (iLRTs): All you need to know

April 26, 2024
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Staking has evolved substantially since Ethereum’s move to proof-of-stake. Dynamic liquid staking solutions have substituted the traditional lock-up periods associated with staking, offering greater liquidity and flexibility.

The game was then revolutionized with EigenLayer and the advent of liquid restaking. It became possible for investors to compound their staking rewards on top and experience higher DeFi composability, enabling highly elaborated staking strategies.

In this article, we will take a closer look at the next step that InceptionLRT took in this evolution: the Isolated Liquid Restaking approach.

What is an Isolated Liquid Restaking Token (iLRT)?

Unlike traditional staking solutions that pool assets, Isolated Liquid Restaking Tokens (iLRTs) ensure each staked asset is represented by a dedicated iLRT. This way, users receive a unique iLRT for each singular asset deposited, making such isolation precise for tracking leading to the following benefits:

  • Transparency:

Each asset and its returns are tracked individually, ensuring clarity for investors.

  • Minimized Risks:

Reduces the impact of negative performance in pooled assets, isolating each staker's risk.

  • Control over Investments:

Investors can make informed decisions based on the performance of each isolated asset, tailoring their strategies to optimize returns.

Isolated vs Basket-Based Approaches

Basket-based liquid restaking solutions, such as those offered by Kelp and Puffer, for example, aggregate multiple assets to provide diversified exposure. While it provides simplifying staking diversification, these solutions are susceptible to performance risks.

While this approach ends up being more convenient, basket-based LRTs introduce additional complexity and risk in managing underlying LSTs. The management of LST weights within the basket must also be taken into account.

unnamed.png [1] - All LSTs Integrated into EigenLayer (Source)

iLRTs, on the other hand, offer a personalized strategy that focuses on individual asset tracking and offers predictable returns. This approach not only simplifies risk management but also enhances investment clarity, allowing Restakers to understand and react to the performance of their specific assets.

Leading Solutions: InceptionLRT and EigenPie

Only two platforms currently harness the power of iLRTs: InceptionLRT and EigenLayers Liquid Restaking solution, EigenPie. This gives us a competitive advantage as first movers, enabling us to establish a strong userbase and brand recognition.

InceptionLRT focuses on prioritizing staker's needs and security, setting a high standard in the market. Our approach to excellence has led us to create a highly secure, transparent, and user-friendly protocol.

unnamed.png [2] - Inceptions Dapp Dashboard (Source)

Getting Started with Liquid Restaking

When evaluating iLRT platforms, consider factors such as security features, the intuitiveness of the user interface, and the variety of assets offered. One of the standout features of iLRTs is the increased security this approach offers. This isolation ensures that operational issues and security breaches affecting one asset do not compromise the entire pool.

Understanding the individual risk/reward profile of each asset separately is crucial for making informed investment decisions.

Reasons to Restake your Liquid Staking Tokens (LSTs)

Join the Restaking Revolution

As the market continues to mature and the bull cycle unfolds, platforms like InceptionLRT and EigenPie are well-positioned to lead the restaking space further.

We encourage everyone to delve deeper into the iLRT ecosystem and learn how to best leverage the opportunities presented.

Start maximizing your staking rewards by exploring InceptionLRT today!

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