An analysis of Genesis LRT

Forward the Original Title‘Genesis LRT - Boost your staking rewards by restaking ETH on 2 layers while maintaining liquidity’

GenesisLRT is an EigenLayer liquidity aggregator whose purpose is to leverage its extensive knowledge of the ecosystem to accrue the best yields for the investors.

Okay, anon. You might think, yet another restaking protocol? How many do we need? Well, let me tell you what’s unique with Genesis and how it differs from the other ones.

But before we do that we have to look more into the EigenLayer concept, because otherwise it will be hard to follow what Genesis is doing.

Let’s take a step back before we deep dive into Genesis LRT (btw if it’s not clear by now LRT stands for liquid restaking token).

A recap on EigenLayer

About 1/4 of all ETH in circulation is staked (120m ETH in total, approx. 31m staked).

Staking offers great security to Ethereum and the smart contracts running on it because an attack on Ethereum’s consensus system would require lots of ETH.

With the introduction of EigenLayer’s restaking, Ethereum validators can now safeguard other protocols with their 32 ETH stake (the 32 ETH is reused). Validators won’t have to unstake or add additional capital + they get extra yield.

EigenLayer allows protocols that require validation outside Ethereum’s consensus to tap into Ethereum’s security via restaking which was previously not possible.

EigenLayer in itself is not a DeFi protocol.

EigenLayer is a platform to bootstrap new proof of stake (PoS) systems. Through the EigenLayer protocol, users can’t engage in any financial activities such as swapping and lending.

However, for the decentralized services built on top of EigenLayer (we call them AVSs, Actively Validated Services), these services could be DeFi applications themselves or support key functionalities in other DeFi protocols. These AVSs are external to the EigenLayer contracts.

LRT protocols are permissionlessly built on Ethereum, and provide these tokens to EigenLayer through the EigenPods (genesis case) or by depositing the ETH on the EigenLayer smart contracts. Anyway, these LRT protocols are the ones degens care about. And yes, Genesis is one of them and we’re going to look closer on it in this newsletter.

But first of all, we have to differentiate between liquid staking and liquid restaking.

Traditional staking involves locking your assets in a smart contract, supporting the blockchain’s operations, and earning staking rewards.

On the other hand, liquid staking allows you to stake your assets with a liquid staking protocol and receive a liquidity token that represents your staked assets.

Liquid restaking is a method where Liquid Staking Token (LST) holders restake by transferring their tokens into the EigenLayer smart contracts. One can also restake native staked ETH (users that have their own nodes, can connect their withdrawal keys to an eigenpod and restaked natively staked ETH).

Okay, you should have a pretty decent understanding of EigenLayer by now, so let’s look at Genesis.

Genesis LRT - what is it, and why is it unique?

GenesisLRT is an EigenLayer liquidity aggregator whose purpose is to leverage its extensive knowledge of the ecosystem to accrue the best yields for our investors. Moreover, we propose a different approach to the restaking process, ensuring that the investor remains capital-efficient during the whole process.

Restaking with GenesisLRT is a completely different process. They enable users to become active members of the restaking collective with a single click, providing a seamless onboarding process.

Using GenesisLRT dApp users pledge their native ETH (non-staked) and in exchange mint a liquid restaking token (LRT) that encompasses the underlying asset and both layers of yield (the staking and restaking). In the backend, they stake the investors’ ETH on a trusted validator and then restake it on our EigenPod. Thus, removing all the technical barriers that users would have to face.

Enters native liquid restaking, a niche pioneered by GenesisLRT that enables investors to participate in the restaking collective with a single-step journey seamlessly.

Okay, let’s take one step back again.

What is native restaking?

The LSTs deposits into EigenLayer are capped and set by the EigenLayer team to ensure the system is not overheated (you’ve probably seen this is the case with popular tokens like stETH, mETH and swETH).

This restriction doesn’t apply to native restaking.

Native restaking, essentially solo staking involving a 32 ETH deposit into the Beacon Chain, operating an Ethereum client node, and notably includes using EigenPods—a personalized contract designed for native restaking. LRT Protocols that utilize native restaking have the advantage of unlimited growth potential.

Flash unstaking (instant unstaking)

In a nutshell it will enable users to unstake within minutes, instead of the 7-day period imposed by EigenLayer.

This is quite bullish because all the other protocols makes you wait at least 1 day, but it could be as long as a week depending on the validator queue.

In my personal opinion I think that protocols that allows to instantly unstake will attract more TVL due to the fact that most DeFi users like to stay liquid. Locking up money for a long time can prevent people from depositing anything in the first place.

So with the opportunity to unstake at any second, I think this will actually lead to a bigger TVL, and that most people will just leave the money there.

Restaking insurance

Genesis is creating an insurance mechanism that in exchange for part of the user’s generated revenue, they can assure up to 25-50% insurance of their stake from any slashing or penalties imposed by EigenLayer/Ethereum.

Distributed Validator Technology

Genesis has embraced Distributed Validator Technology (DVT) into its ecosystem. One of the key advantages of DVT is its ability to eliminate single points of failure. Traditional single-node validator configurations are vulnerable to hardware and software failures, which could lead to the malfunctioning of an entire network.

This strategic integration is supported by twelve distinguished Secret Shared Validators (SSV) node operators, marking a significant leap toward a more decentralized, secure, and inclusive pool of validators.

Genesis has 3 clusters:

• Cluster 1 with Stakin, Ankr, P2P, A41
• Cluster 2 with Everstake, Stakely, Hashkey, Infstones.
• Cluster 3 with DSRV, Allnodes, RockX, Kiln.

Together, they represent a united front addressing the challenges within Ethereum’s staking landscape.

DVT utilizes Shamir’s secret sharing, a cryptographic process that splits the private key into key shares distributed among various nodes.

By encrypting the original validator key and dividing it into key shares, the full key can be reconstructed by summing their component parts. This allows stakers to keep the original ‘master’ validator key securely offline, reducing the risk of attacks.

Omnichain Token

genETH will be an omnichain token present on the major EVM chains: Ethereum, Arbitrum, Optimism, BNB, Polygon, and with plans to integrate any upcoming EVM chains.

Genesis Product Overview

The process starts when an investor deposits Ethereum (ETH) into the GenesisLRT app. This deposit is the first step in a chain of actions aimed at maximizing the investors’s earnings.

Once the ETH is deposited in the Genesis dApp, it’s staked on Ethereum’s Beacon Chain, which is part of Ethereum’s Proof of Stake system (as mentioned above). Staking ETH helps secure the Ethereum network and, in return, the investor earns staking rewards. This means that the investor’s ETH is not only supporting Ethereum but also accruing the first layer of yield.

Next, the staked ETH is directed to the EigenLayer framework through a tool called an EigenPod. An EigenPod is a smart contract used by EigenLayer, which is responsible for managing validators’ balance and withdrawal status.

In the final step, the staked ETH is given to EigenLayer Node Operators. These operators are important because they run software that keeps the network safe and validate transactions. Their role includes running Actively Validated Services (AVS), which are the key innovations that EigenLayer promotes.

By participating in this process, restakers help validate transactions that occur through the AVSs, which connect Ethereum and several other off-chain services. This not only contributes to a strong and stable network but can also lead to higher returns for the investors on their staked ETH.

Let’s dive more into restaking and how you earn points.

Below you can see a screenshot of the UI from Genesis from the restake function.

Pretty straight forward with the restake and unstake buttons. 1 ETH is almost equal to 1 genETH. genETH accumulates rewards by growing in value to ETH over time. Basically similar mechanism to mETH (mantleETH). This is different to eg. Lido’s stETH where you get more tokens daily (rebase mechanism).

More details on how to stake here: https://docs.genesislrt.com/getting-started/restake-eth

Now that we have looked at the product, let’s look at how you can collect the most amount of gems possible (hint: airdrop!)

Genesis Gems (airdrop points) and EigenLayer points

genETH holders will earn genPoints (Gems) that will make them eligible for the token airdrop of 3% of the total circulation supply.

It’s also important to remember that the users who restake with GenesisLRT will be eligible to receive both Gems and EigenLayer points.

You will start receiving Gems as soon as you stake ETH with GenesisLRT. The other available ways to earn Gems include:

— Taking up and completing missions on MissionHub (this will soon be fully functional)

— Referral program

Gems will be distributed at individual levels proportionate to the amount of ETH restaked.

New integrations and DeFi use cases will soon let you receive Gems by interacting with some protocols.

The number of daily Gems is calculated the following way:

Daily Points = Amount of ETH staked x 1000

So, 0.001 ETH will give you 10 Gems a day, while 0.01 ETH — 100 a day, and 1 ETH — 1000 a day.

The total number of points received by you as a single user depends on the number of days you stake with GenesisLRT:

Total Number of Points = Daily Points x Number of Days

Currently, GenesisLRT does not impose any point limits, however, they reserve the right to change this in the future if needed.

Your points are always safe with you, and they only stop accruing once you’ve unstaked all your ETH.

Tokenomics GENtoken

GenesisLRT introduces the native GEN token. It’s intended to serve as:

1. The protocol governance token: Protocol governance through delegate voting: Participate in the selection of the best EigenLayer’s Node Operators to boost rewards on restaked aseets, and general protocol governance.
2. Voting for validators and operators: Choosing validators, operators and AVSs involved in the ReStaking process and their respective delegation strategy.
3. Voting for DeFi gauges: The more votes a pool gets, the more GEN token rewards will be allocated to it; the more TVL a pool gets, the more GEN token rewards will be allocated to it.

GEN Allocation

The planned token allocation scheme is:

• Liquidity Incentives: 48.5%
• Team: 15%
• Private Sale: 10%
• Seed: 9%
• Protocol reserve: 6%
• Advisory: 6%
• Marketing: 3%
• Pre-seed: 2.5%

Genesis 2024 Roadmap

Q1 2024

• Finalizing the Seed round raise & Raising a Private Round $3.0M for covering the team’s operational expenses for at least 2 years, marketing, token listing, audit expenses, and research. (seed round already completed, but haven’t been announced yet)
• Expansion to other Layer 2 chains using restaking.
• Deployment of Genesis Governance Token (GEN).
• 2nd Audit.
• Development of Flash Unstaking and Insurance on-chain.

Q2 2024

• TGE (Token Generation Event) and airdrop of GEN tokens to early participants.
• Development of Bridge + Extract restaking rewards + Auto-compounding.

Q3 & Q4 2024

• Development of Omnichain LRT.
• Development of restaking marketplace (rNFT) - modular LRT.
• Continue the research and integrations with Eigen Layer.

You can read more about their roadmap here:

https://www.genesislrt.com/blog/genesis-lrt-2024-roadmap-updatearticle/

Summary

Genesis is a new LRT protocol which lets you restake your ETH natively. This gives you the advantage of not having to wait for EigenLayer to raise their caps. Also Genesis let’s you flash unstake your ETH, which basically means that you instantly can unstake your ETH stack. Further Genesis has slashing insurance and uses DVT technology which adds extra security.

If you stake your ETH into genETH you’ll collect Gem points and EigenLayer points. The gem points will allow you to qualify for their airdrop which is coming Q2 this year.

They have a bullish roadmap, and an Omnichain token, and are collaborating with the other LRT protocols.

Now it’s all about attracting TVL going forward and planting the Genesis flag on the map for everyone to see.

All right, I guess that’s it for today.

See you around, anon!

Stay bullish.

Disclaimer：

1. This article is reprinted from [The Black Swan]. Forward the Original Title‘Genesis LRT - Boost your staking rewards by restaking ETH on 2 layers while maintaining liquidity’.All copyrights belong to the original author [ROUTE 2 FI]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.