What do we need to know about EigenLayer ($EIGEN)? 137SPS027

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137 Labs2024/10/09 08:13

By:137 Labs

As an indispensable force in blockchain infrastructure, EigenLayer and its core technology AVS (Active Verification Service) have become the focus of industry discussions on how to promote a new round of blockchain innovation. On September 30, 2024, 137Labs, together with several Subject-Matter Experts, jointly held the X Space event with the theme of "What We Must Know About EigenLayer ($EIGEN)?"

What do we need to know about EigenLayer ($EIGEN)? 137SPS027 image 0

This event brought together several experts and researchers from the Web3 field, including:

NingNing | Independent Researcher

OneOne.eth｜137Labs Research Partner

Ivan｜137Labs analyst

Qiu Rong | KOL

In this discussion, the guests delved into the pricing strategy of EigenLayer, the development potential of AVS, the application of LRT protocol, the expected market return rate, and the future application scenarios of full-chain entrance and DVT technology. At the same time, they also analyzed the advantages, disadvantages, and uniqueness of KelpDAO and Puffer Finance, two star projects, and explored the differentiated positioning and potential development opportunities of these projects in the EigenLayer ecosystem. The discussion covered how EigenLayer promotes ecological development through its unique technological paradigm, and how various projects can seize opportunities in this infrastructure and provide innovative solutions.

Through this article, you will learn how EigenLayer implements decentralized services through AVS and its key role in the blockchain ecosystem. This discussion brings you a deep analysis of $EIGEN pricing, technology roadmap, and future development.

What is Eigenlayer, or what is AVS?

Ning Ning gave a detailed introduction to the core structure of EigenLayer, emphasizing its two major components: Restaking and AVS (Active Authentication Service).

Firstly, Restaking refers to users re-staking their staked Ethereum (or other equity tokens, such as Lido's LST) into EigenLayer to obtain additional income. In the traditional staking process, the liquidity of ETH is locked, and users cannot flexibly participate in other DeFi activities. To solve this problem, liquidity staking tokens such as LST were born, allowing users to use tokens for trading or investment while receiving staking rewards. On EigenLayer, these tokens not only represent staking rights, but can also generate more income through the Restaking mechanism, such as in the form of token airdrops. This provides an additional source of income for Ethereum stakers, while also enhancing the liquidity of their assets.

Secondly, AVS is another key innovation of EigenLayer. AVS is mainly used to help new POS chains improve their economic security. When emerging POS chains are launched, the native tokens often have low market value, high volatility, and are vulnerable to economic attacks. Through AVS, EigenLayer allows users to encapsulate staked ETH or other tokens as collateral for these new chains, providing higher economic security. If there are security issues with the new chain, the staked tokens will be confiscated (Slash) to protect the network. This mechanism enables new chains to quickly establish their security with more mature and stable assets, reducing early operational risks.

Overall, Ning Ning emphasized that the innovation of EigenLayer not only provides more profit opportunities for stakers, but also provides strong security support for emerging blockchain projects. EigenLayer currently supports 19 different types of projects, including processors, cross-chain bridges, and decentralized applications, demonstrating its broad application potential in the Web3 ecosystem.

OneOne provides his own insights into the essence of EigenLayer and AVS. Compared to the traditional Restaking track, he emphasizes the importance of the AVS track and deeply analyzes the core functions and practical significance of AVS.

OneOne first pointed out that the infrastructure of blockchain relies on nodes to perform verification and broadcasting, similar to Bitcoin's mining machines. For many new public chain projects, especially those based on POS consensus, a major problem faced in the early stages is the high centralization of nodes and tokens. This centralization brings security risks, such as majority tyranny or a few individuals compromising the security of the chain through 51% attacks, Byzantine protocol attacks, etc. Some smaller public chains are vulnerable to these attacks, leading to security issues such as user funds being stolen and transaction rollbacks.

OneOne emphasizes that Ethereum's staking system is leading in terms of decentralization and number of nodes, and its chip dispersion is also the strongest among existing public chains. Therefore, he believes that the emergence of EigenLayer provides an opportunity for other public chains to leverage Ethereum's security and decentralization advantages to ensure their own cyber security. This is the core concept of AVS - through EigenLayer, other public chains and projects can share Ethereum's security, quickly start up, and reduce the risk of attack.

He mentioned that EigenLayer is the first product in the AVS track, which can lend the security of Ethereum to other projects through verification mechanisms, ensuring that they can operate more securely in the early stages. This innovation is not only an improvement after Restaking, but also a major breakthrough in blockchain security mechanisms.

Overall, OneOne believes that AVS is the key to EigenLayer, which brings greater flexibility and security to the entire blockchain ecosystem by sharing the security of Ethereum. This allows emerging public chain projects to obtain security support from Ethereum without having to build a large number of nodes themselves, significantly improving their survivability. Therefore, EigenLayer has become one of the most innovative tracks in his eyes after Restaking.

Ivan used a simple and intuitive analogy to explain the concepts of EigenLayer and AVS. He compared Ethereum to a top security company with ISO-level security services, which can maintain stable operations in extreme situations such as war zones with its excellent security system.

However, due to the extremely high service quality of Ethereum, which mainly serves high-end customers, its scalability is limited. At this time, EigenLayer, as the "Marketing Minister", proposed a solution: by launching AVS, a "weakened version" of the security service system, Ethereum's security can be leased to other industries, such as the banking industry or other projects that require high security. In this way, it can expand its business scope and increase revenue without compromising Ethereum's high security standards. With the endorsement of Ethereum's golden signboard, AVS can help emerging projects start quickly and achieve a win-win effect.

Ivan further explained why AVS needs to rely on the security of Ethereum. Although the block generation speed of Ethereum (12 seconds per block) is not fast enough to meet certain high-frequency needs, such as oracle or processor-related projects, by utilizing existing liquidity staking bills, it can provide funding and security endorsement for these projects, helping them start and improve security.

In Ivan's view, the endorsement of security mainly comes from two aspects: financial endorsement and technological iteration. However, he emphasized the importance of financial endorsement. When the project party communicates with the client, the client values the financial strength behind the project more, which can directly determine the credibility and reliability of the project. Therefore, when EigenLayer's AVS provides security for emerging projects, financial endorsement becomes the core pillar.

Through this metaphor, Ivan clearly demonstrates the role of AVS: it is an extended version of Ethereum security, which helps other projects start quickly and ensure their security through funding and security endorsement. This model not only helps the growth of new projects, but also provides new sources of income and application scenarios for the Ethereum ecosystem.

Qiu Rong analyzed the token economy and market performance of EigenLayer from the perspective of on-chain data. He shared some specific data to help the audience better understand the current state and future potential of EigenLayer.

Firstly, Qiu Rong pointed out that the total supply of EigenLayer tokens is 1.67 billion, while the theoretical circulation is about 200 million, but the actual circulation is only 114 million, which means a large number of tokens are staked or locked. He further analyzed the current market trading volume, which is about 40 million, which translates to about 2% of the circulation ratio, which is relatively low. In addition, he mentioned that more than 60% of the tokens are staked, which further reduces the number of tokens in circulation.

From the perspective of market value, according to the OTC price (about $4), the circulating market value of EigenLayer is relatively low, and it has not even entered the top 100. However, if calculated at this price, the FDV of EigenLayer is about $6 billion. Qiu Rong compared it with another well-known project, EtherFi, whose FDV is $8 billion. According to his judgment, although the market value of EigenLayer seems not high in the current market environment, with the adjustment of the market and the arrival of the bull market, it is possible for EigenLayer to reach a valuation of $10 billion to $12 billion in the future.

Qiu Rong also mentioned that EigenLayer is not limited to functions such as Restaking and AVS. In the future, it will open up more functions, such as Slash mechanism, decentralized identity (DID) sorting, and zero-knowledge proof (Zero Knowledge), etc. This means that the application scenarios of EigenLayer will not be limited to DeFi, but will expand to a wider Web3 ecosystem, further enhancing its potential.

Finally, Qiu Rong mentioned a market hotspot worth paying attention to: EigenLayer is the first project released by Binance CEO CZ on Binance after his release from prison, which has brought him more market attention. He is not worried about the technical ability of the project, but more concerned about how the team can improve the performance of the project through market operations and control while mastering a large number of token chips.

Qiu Rong's analysis provides us with a complete on-chain perspective, from token economy, market performance to future technological development and market operations, helping listeners better understand the potential opportunities and challenges of EigenLayer.

What role does the LRT protocol play in AVS?

Ning Ning explains the role of the LRT protocol in the AVS ecosystem in detail, combining the history and current market demand of EigenLayer to explain how LRT can play a role in it.

At the beginning, EigenLayer did not widely open the option of re-staking various equity tokens. The earliest supported tokens were only Ethereum's native staking NFT and Lido's STETH. With the evolution of the DeFi market, people gradually found that projects based on liquidity staking tokens (LST), such as STETH and RETH, performed well in CDP stablecoin projects because these tokens can generate lending and Ethereum staking income at the same time. However, many Ethereum holders are unwilling to convert ETH into stablecoins and use leverage, which brings certain risks.

In this context, the LRT protocol has gradually evolved and played a key role in the EigenLayer ecosystem. LRT protocols, such as KelpDAO, Puffer, and EtherFi, allow users to stake ETH in the EigenLayer while avoiding excessive leverage risks. In the case of market expectations and a bull market approaching, users not only hope to hold ETH, but also hope to obtain additional income through the EigenLayer, such as token airdrops. This has made the LRT protocol rapidly popular in the EigenLayer ecosystem, meeting the market's demand for dual returns.

Ning Ning also mentioned that EigenLayer gradually supports more LRT protocol equity tokens, allowing these projects to provide users with more income through re-staking. This approach has attracted a large number of ETH holders to participate. Users can not only obtain Ethereum native income through staking, but also obtain token airdrops through EigenLayer's mechanism, achieving the effect of "one fish, three eats".

In addition, the rise of the LRT protocol has also helped the Ethereum Foundation achieve its goal of decentralization. Previously, Lido's share of the Ethereum staking market once approached 33%, threatening Ethereum's Byzantine consensus security. By promoting the LRT protocol and Restaking, Ethereum successfully reduced Lido's market share from 33% to 28%. Therefore, the LRT protocol not only provides users with more staking options in AVS, but also enhances the decentralization and security of the Ethereum network through decentralized staking.

In summary, the role of the LRT protocol in AVS is to help users obtain EigenLayer's token airdrops and other returns while providing flexible staking options, and to promote the decentralization of the Ethereum network as a whole.

OneOne provides a vivid metaphor for the role of the LRT protocol in the AVS ecosystem and elaborates on its key role in the entire system.

Firstly, OneOne compares the LRT protocol to the entrance for users to enter the EigenLayer ecosystem, while AVS is the ultimate exit for providing security and services. Under this framework, the LRT protocol is like a "recruitment company" for EigenLayer, its role is to attract users and funds into the system, and provide basic liquidity and security for the entire AVS system by re-pledging their tokens. LRT is responsible for simplifying this entry process, making it easier for ordinary users to participate, thereby reducing the technical threshold and attracting more users and funds to join.

OneOne further emphasizes that another key role of the LRT protocol is to simplify business processes. The development trend of modern DeFi and Web3 revolves around how to make it easier for users to get started. The LRT protocol simplifies the operation process of staking and re-staking, allowing even users who are not familiar with the technology to obtain profits through simple operations, which echoes new technologies such as abstract accounts in the DeFi ecosystem. Users can easily participate through the LRT protocol without the need to deeply understand complex financial operations or technical principles.

In addition, OneOne pointed out that the LRT protocol plays a role in decentralizing token concentration in the AVS system. Similar to banks in traditional financial systems, the LRT protocol serves as an intermediary coordinator to help distribute EigenLayer tokens among multiple different projects and users, avoiding situations like Lido that are too centralized, protecting the decentralization and security of the entire network. This decentralized model effectively reduces system risks and enhances the network's anti-attack capabilities.

In summary, the role of the LRT protocol in AVS is an entry and intermediary coordinator. It simplifies the staking process, attracts more customer engagement, and helps to decentralize the concentration of tokens, ensuring the decentralization and security of the network. In the EigenLayer ecosystem, the LRT protocol provides basic liquidity and security guarantees for AVS, promoting the operation and development of the entire system.

Ivan made a post script on the role of LRT protocol in the AVS system, further clarifying the role of LRT in the entire EigenLayer ecosystem.

Ivan explained that the LRT protocol is defined in the EigenLayer as an Operator, which is a node that provides verification services for AVS. These Operators play an important role in performing verification tasks in the AVS system and earning revenue by providing services. As Operators, they are not only nodes in the EigenLayer verification network, but also need to comply with the operating rules set by each AVS project, especially regarding the online and stability requirements of nodes.

If these nodes experience disconnection or unstable operation, the AVS project has the right to confiscate them, which is similar to the confiscation rules in Ethereum's Liquid Staking mechanism. This mechanism ensures the efficient operation of the AVS system and ensures the security and stability of the network.

Ivan explained this role relationship again using the metaphor of a security company. The LRT agreement is both the HR responsible for recruiting security personnel and the supervisor who ensures that security personnel fulfill their duties and do not disconnect. If a node fails to work properly, the AVS project party has the right to punish it, which is the dual responsibility of the LRT agreement as an operator.

Overall, Ivan emphasized the key role of the LRT protocol in AVS - they are not only the basic operators of the system, ensuring the stable operation of nodes, but also play the role of supervisors, responsible for ensuring the normal operation of verification services and accepting punishment when necessary. The existence of this role ensures the security and Sustainability of the AVS system.

Qiu Rong also pointed out the competitive relationship between Lido and Rocket Pool. Qiu Rong pointed out that although Rocket Pool has been gradually eroding Lido's market share, due to the high correlation between Lido and Ethereum, their holdings are almost identical, so it is difficult for Rocket Pool to truly challenge Lido's dominant position in the market.

Although this viewpoint is not directly related to the relationship between AVS and LRT, Qiurong's observation reflects the status of Lido as a giant in the Ethereum staking ecosystem and its competitive dynamics with other protocols such as Rocket Pool. This market competition more or less also affects the development of various staking protocols in EigenLayer and its ecosystem.

Overall, Qiu Rong acknowledges the role of LRT in AVS, and his additional ideas are more focused on ecological competition in the staking market.

What is the expected rate of return for AVS and what are the estimation methods?

OneOne provides a detailed explanation of the expected return rate and estimation methods of AVS. Starting from the business scope of EigenLayer, he introduces the main projects and functions involved in AVS, and gives an estimate of the return rate combined with specific calculation methods.

1. Cash income contribution of AVS project

OneOne mentioned that the AVS project mainly generates revenue by processing data availability (DA), oracles, and cross-chain services. He provided the following estimates:

DA revenue: He gave an example to calculate the DA project represented by Celestia, estimating that the processing cost of Ethereum DA is about $900/megabyte, processing about 15,000 megabytes of data per month. If all Layer 2 DAs use EigenLayer, the annualized return on AVS is about 1%.

Oracle revenue: eOracle provided by EigenLayer protects security as an oracle, with an annualized rate of return of about 0.5% to 0.7%.

Cross-chain benefits: By providing security support for cross-chain projects through EigenLayer, the yield is relatively low, only about 0.1%.

The basis for the calculation is that the current total amount of EigenLayer staking is about $274 million, and considering the amount of staking and market price fluctuations, the overall AVS yield is about 4%.

2. Benchmarking market interest rates

OneOne further analyzed the benchmark interest rate between AVS returns and Ethereum staking. He pointed out that staking Ethereum itself has a return of about 4%, plus the AVS return of about 4% brought by Restaking, the overall annualized return can reach 8%.

Regarding future expectations, he stated that EigenLayer currently only collaborates with 5-6 projects, and with the addition of more projects (such as Renzo, EtherFi, etc.), AVS's yield is expected to double, reaching an annualized return of 12% to 20%. This expectation is based on the growth of TVL (total locked value) and the improvement of profitability. If EigenLayer's TVL grows exponentially in the future, its yield will also increase accordingly.

Ivan provides his insights into AVS yield expectations and estimation methods, and explains why it is challenging to calculate AVS future earnings expectations directly from models.

1. Cash income contribution of AVS project

Ivan believes that although it is possible to try to use models to predict the future returns of AVS, this method is very difficult due to too many uncertain factors in the market. He pointed out that the variables involved in AVS are too complex and difficult to predict, especially in different market environments, where factors affecting returns may change significantly. Therefore, Ivan suggests not to overly rely on complex models for accurate return estimates.

2. Benchmarking market interest rates

Ivan prefers to evaluate the future returns of AVS by benchmarking against the Ethereum market interest rate. He pointed out that changes in market interest rates often reflect investor behavior and market supply and demand, so it can serve as a relatively stable reference.

Ivan mentioned that the current market is in the bear market stage, and the annualized interest rate of the Ethereum lending protocol is about 3%. During the bull market stage of the market frenzy, the lending rate of Ethereum once reached 10% to 20%. He believes that the future yield of AVS can refer to the extreme interest rate situations of these two markets.

Bear market phase: When the market is quiet or inactive, the yield of AVS may be similar to the Ethereum lending rate, maintaining around 3%.

Bull market stage: When the market is frenzied, the yield of AVS may rise to 10%~ 20%, which is equivalent to the level of Ethereum lending rate during the bull market.

This analysis method is partially consistent with OneOne's view that the yield of AVS may increase by 3-4 times on the current basis, reaching 10% or even higher. He also pointed out that the behavior of large investors has a decisive impact on market interest rates and prices. If AVS cannot provide attractive yields, large investors will turn their funds to other agreements that can provide higher returns. Therefore, AVS must at least match the yield of lending agreements to attract investors.

What is the difference between 137labs partner KelpDao and competing products?

OneOne has conducted a detailed analysis of the differences between KelpDAO and its competing products, and discussed the advantages and disadvantages of KelpDAO compared to other projects from two aspects.

Advantages

Security Improvement: OneOne specifically mentioned KelpDAO's vault mechanism. This mechanism can distribute users' assets across different chains, such as Scroll, ZK chain, and OP chain, reducing security risks when running on a single chain. In contrast, other projects such as Renzo and EtherFi may face security issues with Permit2, where assets may be maliciously transferred after user authorization. KelpDAO greatly reduces this risk by distributing across chains. The probability of security bugs appearing on multiple chains at the same time is much lower than that of running on a single chain, which improves the security of the entire system.

Save Gas Fees: KelpDAO also reduces the gas fees required for cross-chain operations for users, especially during the high gas fee era on the early Ethereum network. Users no longer need to frequently cross-chain tokens for complex operations, thereby reducing costs and operational complexity.

The attitude of the project side : KelpDAO has shown a positive attitude, that is, it clearly supports users to carry out the "one fish, multiple eats" strategy. OneOne believes that KelpDAO not only recognizes users' behavior of gaining benefits in multiple projects, but also actively designs the system to make this strategy more convenient and secure. This user-friendly attitude has become a highlight of KelpDAO.

Simplify blockchain operations: OneOne mentioned that KelpDAO's design simplifies complex blockchain operations, making it easier for users to get started and operate. This simplified project, especially in the Web3 and DeFi ecosystems, is very popular because it lowers the technical threshold for users and allows more people to participate.

Disadvantages

Late launch: OneOne believes that KelpDAO's biggest disadvantage is its late launch. Compared with Renzo and EtherFi, KelpDAO's launch time is significantly delayed, which makes it lag behind these early projects in TVL (lock-up total value) and user volume. This means that KelpDAO is relatively weak in business expansion ability, and the TVL scale is small, which is also an important factor currently limiting its development.

Market competitive disadvantage: Although KelpDAO performs well in some aspects, its competitiveness is still not outstanding compared to other competing products, especially in terms of funds and market share. OneOne mentioned that KelpDAO only received more than 3 million tokens, while Renzo and EtherFi performed more strongly. Even so, KelpDAO performs better in certain key areas (such as security).

Ivan analyzed the differences between KelpDAO and competing products, emphasizing KelpDAO's unique positioning in the LRT track and its future market potential.

Ivan first pointed out that KelpDAO is currently the only project among many competitors that focuses on LRT. Other projects such as EtherFi, Renzo, Puffer, and StakeStone are all projects that extend from Liquid Staking to Restaking. KelpDAO is a pure LRT protocol, which sets it apart from other competing products in terms of positioning.

The uniqueness of this positioning implies that KelpDAO's market value and future performance can be used as a reverse deduction indicator of AVS yield. Ivan believes that KelpDAO's market value will directly reflect the market pricing and future profitability of the AVS system. This is because KelpDAO focuses on the LRT field, and its market performance in this field will help predict the potential of AVS in the system.

Ivan also shared an important development: KelpDAO plans to expand its Liquid Restaking service to the BNB chain. Previously in the Space with Pencils Protocol, KelpDAO has publicly stated that they will extend LRT to the BNB network, not just limited to Ethereum. This expansion makes KelpDAO a project that supports multi-chain Restaking protocols in the future, which Ivan believes is a very wise strategic choice, especially since the market potential of the BNB chain is far superior to Solana.

Disadvantages

Ivan pointed out that KelpDAO's current TVL is low, which may limit its short-term revenue performance. As TVL is one of the important indicators for measuring project success, KelpDAO faces the challenge of how to improve its TVL to increase market share and profitability. However, Ivan remains optimistic about KelpDAO's prospects, especially as it becomes the first project to provide Liquid Restaking services on the BNB chain, which brings huge market opportunities.

Qiu Rong provides a concise analysis of the differences between KelpDAO and competing products, focusing on TVL and valuation.

He pointed out that KelpDAO's TVL broke through $1 billion in a few months, which is not very high, but it is still at a medium level in the case of late development. He specifically mentioned that KelpDAO's first round valuation was $90 million, which is relatively low and provides greater upward space for its future performance in the secondary market. Qiu Rong believes that compared with some overvalued projects, undervalued KelpDAO may perform better in a cold market.

In addition, Qiu Rong mentioned KelpDAO's investor GSR, believing that if GSR becomes its market maker, KelpDAO's market performance may outperform competing products such as Renzo and ETHFI.

Overall, Qiu Rong is optimistic that KelpDAO will achieve better market performance in the future through lower valuations and strong market partners.

Ning Ning offers an in-depth look at what sets KelpDAO apart from competing products, focusing on KelpDAO's User Experience, market expansion strategy, and how it differs from other projects.

Ning Ning emphasized the uniqueness of KelpDAO in User Experience. She mentioned that the KelpDAO team pays special attention to optimizing liquidity and slippage when dealing with RS ETH. As early as March, KelpDAO provided rich liquidity for RS ETH and ETH, reducing user slippage and meeting users' needs during transactions. This design starting from user requests shows the team's sincerity.

However, he also pointed out that although KelpDAO has performed well in liquidity management, the market is more concerned about the investment institutions behind the project and the ability to discover new trends. This has caused KelpDAO to encounter development bottlenecks in certain areas, especially in the context of Ethereum's shift to Rollup centralization. KelpDAO, as an LRT protocol, may no longer be the main line of the market, but it still has advantages in certain areas.

Ning Ning also mentioned that KelpDAO is expanding to the BNB chain, which is a positive move and similar to the strategy of projects such as EigenLayer. He believes that while KelpDAO is expanding to more chains, it also needs to explore new market demands and cannot rely solely on parallel expansion. For example, KelpDAO can consider cooperating with projects such as Babylon in the future, and even expand to the Bitcoin chain to seek more cooperation opportunities.

In addition, Ning Ning also mentioned that KelpDAO can learn from the practices of other competing products. For example, Puffer is promoting the Based Rollup concept, EtherFi is promoting PayFi debit cards, and other new features. He suggested that KelpDAO should not only consider expanding to more chains, but also find new growth points upstream and downstream of the stack, such as providing AVS services for the Consumer Chain or exploring more application scenarios at the DeFi infrastructure level.

137Labs partner Puffer, what differentiates it from competing products

OneOne makes a concise analysis of the difference between Puffer Finance and competing products, focusing on the advantages and disadvantages of Puffer Finance.

Advantages

Vertical Integration: OneOne emphasizes that the biggest advantage of Puffer Finance is its high degree of verticalization. Whether it is LST or LRT, users can earn profits on the Puffer platform. Puffer not only supports staking and re-staking, but also allows customer engagement node operation, which is difficult to achieve in other projects.

Fragmented Node Operation: Puffer allows users to operate nodes in a fragmented way, unlike other staking protocols that require 32 Ethereum to run a full node. In Puffer, users only need 1 Ethereum to participate in node operation, which provides new opportunities for users who cannot provide a large amount of Ethereum. This feature positions Puffer as a protocol that combines LSD and LRT and can play a role in both fields.

Disadvantages

TVL is not high : OneOne mentioned that Puffer Finance's TVL is still low, which is a clear disadvantage compared to some more mature competing products. The lower TVL limits its market appeal and scale development.

Recent Points Issue : Puffer recently had a dispute with zkLink over double points, which resulted in Puffer having to compensate users with its own tokens. Despite Puffer's sincerity in trying to solve the problem, the compensation expected by users is EigenLayer's points, and Puffer's token compensation did not meet users' expectations. OneOne suggests that Puffer should have better control over its token price in the early stages. If the token price can remain stable, users may be more willing to accept rewards provided by the platform.

Ivan provides a detailed technical analysis of what distinguishes Puffer Finance from competing products, with a particular emphasis on Puffer's uniqueness in terms of penalty-resistant technology and innovation based on Rollup.

Ivan mentioned that Puffer is currently the only Liquid Staking protocol that has built-in anti-penalty technology. Compared to other competing products, most of them rely on SSV's DVT technology or do not have similar functions. Although this technology has a smaller impact on the user's direct experience because the probability of penalty events is lower, it provides users with higher security, which is Puffer's unique advantage.

Another significant difference of Puffer is its UniFi AVS product, which is based on the Based Rollup technology. Ivan explained that Based Rollup is different from traditional optimistic Rollup or ZK Rollup. It abandons sorting in Layer 2 and places all sorting on Ethereum Layer 1. This can unify the differences in Layer 2 sorting methods, provide the same security as Layer 1, and reduce gas fees.

In order to solve the problem of slow Layer 1 sorting, Puffer introduced the Preconfs mechanism. This mechanism allows users to quickly confirm transactions on the front end, while the actual sorting and final confirmation continue in the background.

Although Puffer's technological innovation is remarkable, Ivan also pointed out that it is currently uncertain whether these technologies can generate sufficient demand in the actual market. Although Puffer provides leading solutions in technology, whether these innovations can find practical applications in the market still needs further verification.

Qiu Rong supplemented the difference between Puffer Finance and competing products. Qiu Rong first mentioned Puffer Finance's performance in the recent zkLink incident. He believes that Puffer's team has shown sincerity and is willing to compensate users for 50% of their losses, although they cannot directly provide the EigenLayer tokens that users hope for, but instead provide Puffer's own tokens. This also shows that Puffer, as the project party, still shows a strong sense of responsibility in event handling

Qiu Rong emphasized that Puffer needs to ensure that its token price does not differ too much from the Eigen token price in order to maintain user confidence and stable market development. This is particularly important for Puffer because users have high expectations, especially in compensation events. If the token price fluctuates greatly, it may affect users' trust in the project.

Qiu Rong also mentioned that Puffer had a strong momentum in the early financing stage and had plans to develop its own Layer 2, but now it seems to have turned low-key. Qiu Rong specifically mentioned that market makers are crucial to maintaining the Puffer coin price. He had hoped that Jump would become Puffer's market maker, but Jump has withdrawn and it is currently unclear which company is providing market-making services for Puffer. If it is a market maker like DWF, it may be helpful for the stability of the coin price.

Take stock of other ecological projects such as ether.fi Renzo, etc. Are there any interesting or noteworthy projects? How is the development going? Do they still have potential?

Ivan analyzed two projects, EtherFi and Renzo, and discussed their performance and potential in the ecosystem. Ivan mentioned that EtherFi is currently one of the best-maintained projects in TVL. Despite the incident of deducting the large EigenLayer airdrop, EtherFi's overall performance in the Liquid Staking field is still stable, especially in the liquidity maintenance of Ethereum staking certificates, which is particularly outstanding. This makes Ether.Fi one of the successful projects in the current ecosystem, demonstrating strong liquidity and user support.

In contrast, the main problem with Renzo's performance lies in the serious Depeg issues that its ezETH token has experienced. Ivan pointed out that the Renzo team has obvious deficiencies in liquidity management and has failed to solve this key issue well, leading to a decrease in market trust.

OneOne added some insights into the two projects, EtherFi and Renzo. He mentioned that many people had complaints about the high FDV of these projects, especially EtherFi and Renzo, at the opening. This issue has had a negative impact on the subsequent development of the project, especially for most investors participating in the secondary market, where high FDV affects the performance of the secondary market. OneOne believes that this is an obvious drawback of these two projects. However, he also pointed out that it is difficult to judge whether there will be similar problems for projects that have not yet issued coins.

How is $Eigen priced and what is the reference value of pre-market prices?

OneOne conducted an in-depth analysis of $Eigen pricing and the reference value of pre-market prices.

He first pointed out that in the early part of this year, many projects were listed on exchanges with high FDV, which led to losses for retail investors in the secondary market. Many tokens with high FDV were priced too high, coupled with market makers' control behavior, which put retail investors in a disadvantageous position in the secondary market. Therefore, many investors expressed dissatisfaction with these VC coins and expressed their unwillingness to take over. This situation has caused some exchanges and project parties to reflect and gradually begin to use pre-market methods to let the market price itself.

OneOne uses Binance's Pre-market as an example to explain the role of this mechanism. Through pre-market trading, the pricing power of tokens is handed over to early participants in Launchpad, allowing them to set their own prices based on market supply and demand, rather than being controlled by market makers. This pricing method effectively avoids situations where the opening price is too high and ensures that the price is more in line with market expectations.

He also mentioned that Eigen's pre-market trading price on other exchanges is roughly between $4.1 and $4.4, which is relatively reasonable. Although it may not meet the expectations of some early participants, it is more appropriate in the current market environment. OneOne emphasized that although Eigen's pre-market liquidity is low, the price formed by market consensus helps to avoid the risks brought by high valuation openings.

In the end, he believes that this price reflects the sincerity of the project party. Although the future market maker operations still need to be observed, at least in the pricing process, the exchange and the project party have shown respect and progress for the market. For participants, according to the current pre-market price expectations, there is still some profit space in the secondary market in the future.

Ivan provides a detailed analysis of the pricing of $Eigen and the reference of pre-market prices, citing some key data.

He pointed out that the total circulation of $Eigen is 1.67 billion, and the initial circulation is theoretically 200 million, but the actual circulation is much lower than this number. There are two reasons for this: first, many holders have staked Eigen tokens and have not immediately withdrawn them; second, some users, especially those in the first phase, have not yet claimed their $Eigen. This has led to the actual circulation in the market being much lower than the expected 200 million.

Based on this situation, the current pre-market price of $Eigen is about $4, which means the market value is less than $1 billion. Ivan emphasized that the next large-scale token unlock will occur at the same time in 2025, which means that the market circulation will remain around 200 million for a long time in the future.

Ivan also mentioned that although the current pricing is not particularly high, it needs to be analyzed from another perspective: the comprehensive cost price of institutional investment. According to the disclosed data, the A round financing is $500 million, but the subsequent additional $100 million financing did not disclose the valuation. By calculating the token economy proportion of institutional investment, Ivan estimated that the comprehensive cost price of institutions is about $0.33. The current price of $4 means that these institutions have obtained a return of more than 10 times. He suggested that everyone can refer to the historical data of some other projects to measure the investment return multiple.

Finally, Ivan emphasizes that everyone's investment decisions need to be based on personal judgment. He only provides market data analysis and does not provide specific investment advice.

Qiu Rong conducted a detailed analysis of the pricing of Eigen and the rationality of the pre-market price. He first mentioned that the institutional investment cost of Eigen is about 0.3 US dollars, while the current pre-market price is 4 US dollars, which means that the market value of Eigen has increased nearly tenfold. Qiu Rong believes that this price range is reasonable, especially considering that Eigen's TVL is not high, and the institutional valuation of it is naturally not too exaggerated.

Qiu Rong also mentioned that the current FDV valuation of Eigen is about $6 billion, and if the future market develops smoothly, its market value may rise to $10 billion to $12 billion, and the price may double to $8, which is also a reasonable expectation. He believes that $4 to $8 is a reasonable price range for Eigen, reflecting the market's expectations for it. If the future bull market comes and market liquidity increases, the price may further rise.

He also pointed out that for short-term "mao mao party", the pre-market price of $4 may not be ideal because they expect greater profit margins. However, in the long run, this is beneficial for projects like EigenLayer because it avoids the situation where many high FDV projects are smashed to zero after listing. Qiu Rong emphasized that this pricing strategy is actually a protection for the project party, ensuring the long-term healthy development of the project and avoiding extreme market declines like some VC coins.

In summary, Qiu Rong believes that the price range of $4 to $8 is a reasonable pricing for Eigen under current market conditions, which not only protects the project party, but also leaves room for growth in the future bull market.

Ning Ning provides personal insights on Eigen pricing and pre-market price reference, and shares his investment strategy.

NingNing mentioned that he received an airdrop from Eigen and chose to pledge it instead of selling it after pre-market trading. He pledged this part of the tokens to Puffer, a project that has not yet been issued and has potential development opportunities, especially in AVS cooperation, which may bring greater opportunities in the future.

From a macroeconomic perspective, Ning Ning mentioned that the world is currently in a period of interest rate cuts, and pointed out that the release of liquidity in China and globally will bring a large amount of funds into the market. In this context, the anti-logic of VC coins may no longer apply, because when liquidity is abundant, the market demand for new assets and projects will increase significantly. As an architecture, EigenLayer can generate new assets in batches through its new technology models (such as ZK processors, AVS oracles, etc.). Therefore, Ning Ning is confident in the future development of EigenLayer, especially in the next bull market, where EigenLayer will play an important role.

Ning Ning also pointed out that the cyclical changes in the market may affect the short-term performance of the project, but this does not mean that the project itself has problems. Many new things need to go through multiple cycles to grow, and AVS is no exception. Therefore, he chose to pledge tokens, hoping to get more airdrops rather than frequent trading. He also shared his experience as a senior investor, believing that frequent trading often leads to losses, so he tends to hold for the long term.

Overall, Ning Ning has a positive attitude towards the pricing of $Eigen and believes that the long-term potential of EigenLayer is worth looking forward to in the context of abundant global liquidity. He has demonstrated confidence in long-term investment through his staking strategy, especially optimistic about the future development of AVS and its related fields.

Conclusion

Through in-depth discussions on the launch of EigenLayer and its core technology AVS, we can see that EigenLayer not only brings new technological paradigms to blockchain infrastructure, but also injects new vitality into the entire Web3 ecosystem. However, with the gradual landing of EigenLayer in the market, the industry is also facing many challenges. From token pricing strategies to liquidity management, to technology integration in cross-chain cooperation, all project parties are exploring how to better balance the relationship between market demand and innovation.

In this discussion, the guests unanimously agreed that EigenLayer and AVS are key innovations driving the evolution of blockchain infrastructure, especially in the context of current global economic policy adjustments, their importance is becoming more prominent. Although the risks in the market cannot be ignored, especially in the liquidity and pricing process of tokens, through technological improvements, increased transparency, and cautious risk management, EigenLayer is expected to become an indispensable infrastructure in the Web3 ecosystem. With the gradual maturity of LRT protocol and AVS technology, more projects will develop around EigenLayer, helping the growth of the entire ecosystem.

Whether you are an investor or a project developer, in this rapidly changing blockchain market, keeping up with technological trends, understanding innovative points in infrastructure, and deploying them in advance will be the key to seizing new opportunities. The launch of EigenLayer marks an important milestone in blockchain innovation. In the future, with more projects and funds entering, it will play an increasingly important role in driving industry development, bringing users safer and more efficient revenue opportunities.

The article is for sharing and communication only and does not constitute investment advice.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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