Hot Projects in the Ethereum Staking Track

Forward the Original Title‘以太坊生态”王炸”明牌，已诞生100亿美金TVL独角兽’

With over a year of development since Ethereum’s transition to Proof of Stake (PoS), the staking track within the Ethereum network has gradually evolved into a market worth hundreds of billions. As of now, the amount of Ethereum staked has reached 41.8 million ETH, accounting for over 35% of the total supply. The increase in staked ETH makes it easier for Ethereum to rise in value.

In addition, recently, there has been a proliferation of staking-related projects, with projects worth hundreds of millions or even tens of billions of dollars in TVL beginning to emerge. Top-tier institutions like BN and a16z are also casting wide nets, further causing a clustering of staking projects. Ordinary investors, in anticipation of project Airdrops, are also actively participating in staking. Today, in plain language, let’s sort through some of the recently popular staking projects for everyone.

01 The Evolution of Governance Token Distribution in Cryptocurrency Projects

Since the development of the blockchain industry, it has experienced several cycles of bull and bear markets. Although each cycle brings new narratives and new gameplay, there are some similarities. To better understand staking and why it has become popular, let’s first understand the various asset issuance methods that have emerged in this industry:

Block Production —— Represented by projects like Bitcoin and Ethereum: Anyone who contributes to maintaining the security and decentralization of the blockchain network receives token rewards. As the industry develops, the barrier to entry gradually increases, and block production becomes an industry in itself.

Public Sale —— Represented by projects like EOS and BTT: Initially, this involved directly selling tokens, but as the industry evolved, different models emerged, with higher barriers to entry. For example, participants might need to hold a specific token designated by the project to qualify for the sale.

Liquidity Mining —— Represented by projects like Uniswap: Users provide liquidity to earn token rewards. This mechanism is closely related to the development of on-chain trading. Many early projects used liquidity mining as the main means of token distribution, leading to significant token price fluctuations and potential death spirals, where projects fail due to extreme price volatility.

Airdrop —— Represented by projects like Uniswap and dydx: Tokens are distributed for free based on the level of user participation in applications. Initially used as a reward for early blockchain adopters, airdrops have evolved to incentivize user engagement and provide business data to projects. The term “reverse rug” has emerged to describe this phenomenon.

Inscription ——Represented by projects like ORDI and Sats: Most project tokens are released 100%, and anyone can participate, ensuring fair distribution. However, as the space becomes more competitive, profits tend to accrue to Bitcoin miners.

Staking (Points) —— Represented by projects like friend tech and blast: Users stake mainstream cryptocurrencies to increase the Total Value Locked (TVL) of the project and earn staking rewards. Additionally, they receive project points as proof of participation in future token distributions. Due to the anticipation of Airdrops, particularly in projects backed by institutions, staking involves relatively low risk and is seen as a “free lunch.” The immediate distribution of points encourages user participation.

Initially, staking was primarily focused on Ethereum node staking to earn annual returns. However, it has evolved beyond just earning interest on Ethereum. Other projects have started to emulate this model, and as long as there are points to be earned and the project is reputable, users are willing to participate. Currently, points are one of the key incentives for users to use project products. However, from the user’s perspective, there are potential downsides, including various interaction tasks and the possibility of continuous persuasion by project teams.

It’s evident that due to the characteristics of blockchain technology, the methods of token distribution within the industry, especially those that lead the industry in the short term, are low-barrier and easy to participate in.

02 Inventory of Hot Projects in the Staking Track

Inventory of Hot Staking Projects

Security is the most crucial aspect of staking projects: clear and reliable project backgrounds, institutional endorsements, and low risk of exit scams. Otherwise, it’s akin to “watching someone else’s profits while others are watching your capital.”

Currently, considerations mainly revolve around three aspects:

Funds Volume: The amount of funds staked in the current project. A higher volume implies more participants and relative safety.

Institutional Endorsement: Whether there is an endorsement from top-tier institutions, which provides a certain level of security.

Team Background: Whether the project team members are publicly known and if they have worked on other well-known projects.

• EigenLayer

EigenLayer is a Restake protocol based on Ethereum, primarily serving LSD asset restaking, node operation, and AVS (Active Validation Service). It aims to provide security and reward mechanisms in the crypto economy. EigenLayer allows users to restake native ETH, LSDETH, and LP Tokens, providing a secure platform for third-party projects to enjoy the security of the Ethereum mainnet while earning additional rewards. The overall goal is to promote the development of the entire ecosystem.

TVL: $11.9 billion

According to Defillama data, as of March 10th, EigenLayer’s total TVL is $11.9 billion. The top three assets in the treasury are WETH (42.56%), STETH (31.62%), and SWETH (6.9%). It’s evident that EigenLayer’s staked assets are all related to Ethereum, serving the Ethereum ecosystem entirely.

Investment Institutions:

Merlin Chain has completed four rounds of financing, with investment from a16z, Coinbase Ventures, Polychain Capital, among others. Notably, a16z invested $100 million on February 22nd this year.

• Merlin Chain

Merlin Chain is a Bitcoin Layer 2 solution that integrates ZK-Rollup networks, decentralized oracles, and on-chain BTC anti-fraud modules. Its goal is to enhance Bitcoin transaction efficiency and scalability, making the Bitcoin ecosystem more vibrant.

The team behind Merlin Chain is Bitmap Tech, which has successfully launched a series of high-value NFT assets, including Bitmaps, Goosinals NFT, and BRC-420 Blue Boxes, all of which performed well last year.

Investment Institutions:

In February of this year, Bitmap Tech, the team behind Merlin Chain, received investment from ABCDE and OKX Ventures, although the specific amount is undisclosed.

TVL: $30 billion

According to official data, as of March 2nd, Merlin Chain’s mainnet has been online for 23 days, and the TVL has exceeded $30 billion. Bitcoin accounts for 58% of the TVL, while Ordinals account for 33%. The project team places significant emphasis on community feedback and collaboration with the Bitcoin ecosystem.

• Blast

Blast is an Ethereum-based Layer 2 (L2) solution launched by the Blur team, aiming to provide users with native yield functionality. It is the first L2 network to incorporate native yields into its design, allowing users’ assets to appreciate on Blast. Blast generates income by staking on Ethereum and Real World Asset (RWA) protocols. Compared to other L2 chains with zero interest rates, Blast offers around a 4% interest rate on deposited ETH. Blast’s goal is to make L2 networks profitable. After users deposit assets, Blast regularly distributes profits to them.

Blast’s main slogan is “An L2 network that can help you make money.” Users deposit funds into Blast’s L2 network, and Blast then stakes these funds on Ethereum’s Layer 1, typically through Lido staking. Blast then returns the interest earned to users, achieving the so-called “earning money.” Compared to users directly staking with Lido, using Blast also allows users to earn additional Blast points.

TVL: $28.6 billion

As of March 9th, Blast’s TVL is $28.6 billion, with a total of 420,000 users according to the official website.

Investment Institutions:

In November 2023, Blast raised $20 million in funding, with participation from Paradigm, Lido strategic advisor Hasu, and The Block CEO, among others.

• ether.fi

ether.fi is a decentralized non-custodial staking protocol where users can stake their Ethereum (ETH) and receive corresponding liquidity staking tokens (eETH). These staking tokens can be used to participate in DeFi activities and generate additional income. Its main feature is to allow stakers to control their own keys, ensuring the security of funds. Ether.fi also created a node service marketplace, allowing users to register nodes and provide infrastructure services. This further promotes decentralization, increasing the choices and flexibility for stakers and node operators. Recently, ETHFI has issued tokens, which has been criticized by many as a mechanism for large holders to withdraw funds.

TVL: $22 billion

According to Defillama data, as of March 10th, ether.fi’s TVL is $22 billion.

Investment Institutions:

Ether.fi has completed two rounds of funding, raising a total of $32 million. Investors include Bankless VC, OKX Ventures, Consensys, BitMex founder Arthur Hayes, among others.

• Puffer

Puffer is a permissionless native liquidity re-staking protocol built on EigenLayer. Its goal is to provide services to node operators (NoOps), re-staking operators (ReOps), and ETH stakers.

In Puffer, node operators play a crucial role. They can participate in node validation and AVS (Active Validator Set) operation at low cost. Puffer utilizes unique anti-slash technology, enabling nodes to securely participate in the validation process and accumulate PoS rewards. Additionally, nodes can earn re-staking rewards through AVS operation, increasing their income. The design of Puffer aims to provide a more flexible and efficient liquidity re-staking process.

TVL: $1.4 billion

According to official website data, as of March 10th, the TVL has reached $1.4 billion, generating 8 billion Puffer points, 240 million Eigenlayer points, and over 3.3% composite APY.

Investment Institutions:

Puffer has completed three rounds of funding. In the early stages, it received grants from the Ethereum Foundation. Subsequently, it attracted investments from Bankless Ventures, Animoca Venture, Eigen Layer founder, prominent figures in the industry like Synthetix founder, and Coinbase’s Head of Staking Business, among many other key opinion leaders (KOLs). The latest round of funding this year was led by Binance Lab. The rapid increase in Puffer’s TVL is closely related to the investment from Binance Labs.

• Renzo

Renzo is a native re-staking protocol on EigenLayer that introduces a liquidity re-staking token called ezETH. Users can deposit Ethereum or EigenLayer tokens into Renzo to mint ezETH tokens. This operation enables users to participate in liquidity re-staking and use ezETH in other DeFi protocols to earn more yield.

Renzo aims to lower the barrier for users to participate, allowing them to easily engage in liquidity re-staking within the EigenLayer ecosystem.

TVL: $900 million

According to Defillama data, as of March 10th, Renzo’s TVL has surpassed $900 million.

Investment Institutions:

Renzo has completed two rounds of funding, with participation from institutions such as OKX Ventures and Binance Labs.

• Ethena

Ethena is an Ethereum-based synthetic USD (USDe) protocol aimed at providing a crypto-native solution. It creates stable synthetic USD (USDe) through strategies such as Delta hedging and internet bonds, offering users income opportunities.

Ethena USDe derives its USD value and income through two main strategies:

Utilizing staked Ethereum (stETH) and its inherent yield;

Taking ETH short positions to balance Delta and leveraging perpetual/futures funding rates;

According to official website data, the current annualized yield for USDe is 109%. \

TVL: $850 million

According to official website data, as of March 10th, the TVL of the USDe pool has reached $850 million.

Investment Institutions:

Ethena has completed two rounds of funding, totaling $20 million. Investment institutions include Dragonfly, PayPal Ventures, Binance Labs, OKX, among others.

• Babylon

Babylon is a Layer1 built on the Cosmos SDK, aiming to extend the security of Bitcoin to more decentralized applications (DApps) and blockchain networks. To achieve this goal, Babylon introduces BTC assets, allowing users to stake Bitcoin on the Babylon network and receive corresponding rewards.

Babylon utilizes some core features of Bitcoin to enhance security:

Firstly, it utilizes Bitcoin’s timestamp service to ensure synchronization between the Babylon network and the Bitcoin network, providing higher security and reliability.

Secondly, Babylon leverages Bitcoin’s block space to extend the security of Bitcoin to other blockchain networks based on proof-of-stake mechanisms, forming a more unified and robust ecosystem.

Finally, Babylon uses Bitcoin as the benchmark for asset value, achieving interoperability with Bitcoin and making staking and liquidity with Bitcoin on the Babylon network more convenient.

The testnet just ended a few days ago, and the mainnet has not yet launched, so there is no TVL-related data. However, as a staking project in the Bitcoin ecosystem, with EigenLayer leading the way, Babylon is worth paying attention to.

Investment Institutions:

Babylon has completed two rounds of funding, with the first round raising $18 million and the second round unknown. Investment institutions include Binance Lab, Polychain Capital, ABCDE Capital, Polygon, OKX Ventures, among others.

03 Conclusion

The above is a summary of the current hot projects in the staking track. It’s important to note that although many projects have various endorsements, it doesn’t mean they won’t exit scam, so it’s important to research thoroughly before participating and be aware of the risks.

Disclaimer：

1. This article is reprinted from [vernacular blockchain]. Forward the Original Title‘以太坊生态”王炸”明牌，已诞生100亿美金TVL独角兽’.All copyrights belong to the original author [Day]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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