Blog 16 – February 2024 – EigenLayer

It’s been hard not to notice Eigenlayer in crypto twitter recently. Ethereum whales in the space have been raving about it now for a few weeks. At first glance and to my uneducated self, it sounds a bit like a creative way to create imaginary value on top of the existing liquid staking solutions. However, many credible people in the space are super bullish on this advancement. Some are even labelling it as the biggest advancement in the space since Ethereum itself.

As per the website ( https://docs.eigenlayer.xyz/eigenlayer/overview ), EigenLayer is a protocol built on Ethereum that introduces restaking, a new primitive in cryptoeconomic security. This primitive enables the reuse of ETH on the consensus layer. Users that stake ETH natively or with a liquid staking token (LST) can opt-in to EigenLayer smart contracts to restake their ETH or LST and extend cryptoeconomic security to additional applications on the network to earn additional rewards.

I found this video interview with the founder helpful:

Gameplan

Ok, so having researched this I am now convinced that I want to farm these Eigenlayer points, especially whilst the window for deposits is open and uncapped until the 9th of Feb. Not only these points, but there are liquid staking and liquid restaking opportunities which benefit from their own points as well. A win-win for a farmer.

When it comes to Ethereum, the fees alone are enough to make it seem like a whales game. I know for a fact that many are simply avoiding this due to cost. You only need to look at the Solana and cosmos ecosystem and their fees to see how well they have benefited from an affordability standpoint. There are upgrades though to the Ethereum network on the horizon, such as the Dencun upgrade proposed for March 13th. This will increase scalability of L2s and reduce fees. I conjunction to this, Ethereum has been bleeding to other layer 1’s and especially lagging BTC. It appears to be due a pump.

So I have whittled the liquid staking and restaking opportunities down to 5 I am interested in. To make it worthwhile I need to invest considerably more than the monthly budget. I am also happy with my existing portfolio positions as they are so cannot really rotate out. I am going full degen, and have purchased $3,800 worth of ETH at ~ 2,250 avg which has given me 1.69ish Eth to play with. I will contribute 0.3 eth to each of the protocols and use the rest for the dreaded gas….

This play is obviously well outside of the criteria, which I may need to review for sizing moving forward. I cannot help but feel that time is running out until we get to retail mania, and I feel heavily underinvested. I don’t have enough money out there to fully take advantage of all of the opportunities.  Full degen mode.

So my strategy is set out below:

Swell

Etherfi

Kelp

Puffer

Renzo

Conclusion

And that’s it. Now we sit and wait, collecting those points which may or may not be worth something one day! Obviously the above is not without risks, and using the extra layer 5 times adds to this risk. Nonetheless its one I hope pays off – and will continue to update you moving forward.


Disclaimer

It goes without saying nothing on this site or anything associated with Happy Crypto Wanderer is or should be taken as financial advice. This site tracks the hopeful journey of one everyday punter just trying to live out a dream. Come back here every month so you can track the journey. Any and all feedback is much appreciated. If you feel so strongly that you’d like me to stop at any time, a large enough donation to this wallet so I can reach my goal could make all this disappear.

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