Shortcut Description:
Example: Stake ETH to ETHx and then Restake it to Kelp in exchange for rsETH tokens.
Post Information:
Currently, only dApps that can be deployed on EVM can utilise Ethereum’s settlement layer and benefit from Ethereum’s security. Therefore, many applications (e.g. bridges, data availability layers, and many many more) have to rely on expensive validation services, often involving token dilution.
EigenLayer seeks to resolve this by enabling Ethereum stakers to contribute to the security of these non-EVM dApps, in return for additional yield. Although there are many details around how restaking will work (I recommend reading Eigenlayer’s whitepaper: https://eigenlayer.io/whitepaper.pdf), the main point is that Ethereum stakers will be able to opt in by granting the EigenLayer smart contracts the ability to impose additional slashing conditions on their staked ETH, based on the specific dApp they choose to support.
Currently, liquid staking is very popular and Liquid Staking Tokens (“LSTs”) such as stETH (from Lido) or rETH (from Rocketpool) are now fully integrated into DeFi. However, restaking is likely to become very popular starting from next year and DeFi users will likely want to also have a liquid representation of their restaking positions. As it stands, users can restake their LSTs directly to Eigenlayer but will not receive any liquid restaking token. However, users can also restake their LSTs with restaking protocols such as Kepl, Renzo, or Restake Finance, in order to earn both Eigenlayer rewards while receiving a liquid representation of their restaking position (-> Liquid Restaking Tokens, or “LRTs”), namely rsETH, ezETH, and rstETH for the above-mentioned protocols.
Although restaking is an extremely exciting concept, the user experience in relation to restaking is far from ideal. Firstly, users need to exchange their ETH for LSTs. Secondly, users then need to restake their LSTs with restaking protocols, which involves the need to ensure that i) they use a legit and safe restaking protocol, ii) they have the correct LST in their wallet, all while iii) incurring high gas fees due to the high number of transactions.
Therefore, having a shortcut that would restake ETH directly would be extremely useful for both DeFi beginners (-> reduced complexity) and DeFi experts (-> reduced gas). There are several restaking protocols out there, but some of the main working ones are currently Kelp, EtherFi, Renzo, and Restake Finance.
Each of them have pros and cons, but Kelp seems to be the one backed by the most experienced and well-known team, as it was created by the co-founders of the successful multichain liquid staking platform Stader Labs. Moreover, Kelp currently already has over $120m in TVL, illustrating the trust it has already garnered.
Kelp offers a process where users can stake stETH or ETHx, receiving rsETH in return to represent their restaking position. Kelp does not have a token yet but it seems obvious that they will have one at some point since governance is key for restaking protocols to decide on which dApp to provide restaking security services to. Therefore, users can currently farm both Eigenlayer restaking points and Kelp points by restaking via Kelp, making the potential shortcut even more attractive.
Source: Kelp documentation (Technical Architecture - Kelp)
As such, I would recommend creating a shortcut to stake ETH in exchange of ETHx, to then restake ETHx to Kelp in exchange for rsETH. I think Kelp is ideal for a first shortcut given its current TVL and its well-known backers. I also think that using ETHx is ideal since ETHx is less popular than stETH and the ETHx Eigenlayer cap has not been reached yet. Obviously, I think more restaking shortcuts would be ideal, but this is only a first post to discuss.
Kelp: https://kelpdao.xyz/
Restake Finance: https://www.restakefinance.com/
EtherFi: https://www.ether.fi/
Renzo: https://www.renzoprotocol.com/