Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
Each week, I think I’ve finally exasperated all strategies for the EigenLayer airdrop (rumored to be in the second half of 2024) but then I stumble upon yet another killer idea.
This will be a summary of the YT-eETH strategy outlined by the Twitter account Pendle Intern on January 12, 2024, which explains why buying and holding YT-eETH or at least LP’ing in the eETH Pool on Pendle might earn us a mega airdrop from EigenLayer and ether.fi.
Previously we covered the EigenLayer caps raise in December 2023, which led to a mania of restaking 9 LSTs. However, during this period new Liquid Restaking Tokens (LRTs) were launched by the teams at Kelp DAO, ether.fi, and Renzo.
rsETH by Kelp allowed ETHx and stETH holders to restake their LSTs and maintain their liquidity in a transferable utility token.
The bigger breakthrough was ether.fi’s eETH and Renzo’s ezETH, both of which allow users to directly deposit ETH and have it natively restaked in EigenLayer, in one transaction, and with no deposit limits.
Since the start of December, Renzo ezETH grew from $2.5M in ETH deposits to $116M as of this writing, while ether.fi grew from $50M to now $330M! Given the vast number of DeFi integrations for eETH (Curve, Balancer, Maverick, Gravita, Sommelier, Term Finance, and Pendle) eETH has grown larger in January, while there’s rapidly growing interest in ezETH which just recently made ezETH transferable.
To further accelerate interest in LRTs, Kelp, Renzo, and ether.fi all have their own loyalty points programs, which we can assume will result in an airdrop of a future token.
Over the last few weeks, the most viral DeFi integration so far among LRTs has been eETH with Pendle Finance. Pendle is a protocol that allows users to tokenize and sell future yields. To learn more about Pendle, check out this previous post here on Wealth Mastery and this episode of The Edge Podcast featuring the CoFounder of Pendle.
Pendle’s latest eETH Pool represents three opportunities:
- Buy/hold PT-eETH (a discounted principal token) and get guaranteed more ETH
- LP in Pendle AMM with near zero IL, similar exposure to holding eETH, but with extra swap fees + $PENDLE rewards
- Buy/hold YT-eETH (the yield token) and own a stream of all yield + EigenLayer points generated by 1 eETH* until maturity on 27 June + 2x etherfi points.
*At the current price of YT-eETH, every 1 ETH gives you yield and points exposure equal to a 10 ETH position (see screenshot below).
The purpose of this YT-eETH strategy is to leverage farm airdrop points for EigenLayer and ether.fi. It is a first of its kind based on my experience the last few years.
This comes at a cost though–anyone buying YT-eETH could buy YTs at a higher price and find themselves later on needing to sell them at a lower price. To be clear, YTs are a claim on streaming yield for yield-bearing tokens so they trend towards 0. YT-eETH will be equal to $0 at maturity on June 27, 2024, meaning the next best question is whether these 2 potential (not guaranteed) airdrops and staking yield can equate to more than what you spend playing the strategy (1 ETH in my example).
I won’t take us further in this conversation because Pendle Intern does a great job of estimating what…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
