Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
With the recent caps raise on EigenLayer, there has been a mania of deposits competing to get into EigenLayer for the chance of earning a future airdrop.
During this race to deposit into EigenLayer, I’ve been surprised how quickly ETH LST holders gave up their liquidity to EigenLayer.
The purpose of any LST was to earn passive staking income while maintaining liquidity to be used in DeFi such as liquidity provisions or overcollateralized vaults. This shortsightedness has presented an opportunity for better product design in an emerging sector called liquid restaking.
Liquid restaking is designed to offer liquidity to illiquid assets (ie stETH, ETHx) deposited into restaking platforms, such as EigenLayer. There are liquid restaking tokens such as rsETH by Kelp DAO which allow users to deposit existing stETH or ETHx and maintain a transferrable utility token while earning additional rewards in EigenLayer.
One team that took a vastly different approach to liquid staking and liquid restaking is ether.fi. eETH by ether.fi is everything you want in one token–to earn passive ETH yield combined with liquid restaking in EigenLayer while maintaining the liquidity to use your tokens in DeFi, plus additional ether.fi Loyalty Points. eETH eliminates the steps required to mint an LST such as rETH and then deposit it later into EigenLayer.
The team at ether.fi cleverly thought ahead about the need to simplify pooling ETH for the Beacon Chain ETH deposits on EigenLayer. With 9 supported LSTs, the one option that is not capped at the moment is Beacon Chain ETH. Staking Beacon Chain ETH is the act of depositing 32 ETH to activate an Ethereum validator. To restake Beacon Chain ETH on EigenLayer, one must create their own EigenPod and change their validator withdrawal credentials to their EigenPod address. All of this is far too complicated for most LST holders so the team at ether.fi abstracted away that complexity by doing all this coordination under the hood when you deposit ETH into eETH.
Although the stETH pool recently reached its newer deposit limit in EigenLayer, other LST deposits remain open. But why would new depositors complicate the need to choose an LST, mint/swap for it, and then deposit the LST into EigenLayer when they can just mint/buy eETH in a single transaction?!
In addition, ether.fi is rewarding Loyalty Points to eETH holders and those who refer friends to ether.fi. Although it’s not confirmed, we can speculate that Loyalty Points will be used to eventually reward ether.fi users with a token. Users can earn additional points for LP’ing into DeFi protocols with eETH such as Curve, Maverick, and Balancer. Users can also earn Loyalty Points borrowing against eETH on Gravita (see the DeFi tab on the ether.fi app).
Today, I’ll cover how to mint eETH in a one step so I can begin earning EigenLayer points!
How to Earn EigenLayer Points with eETH by ether.fi
Before we get started, please be aware of these risks.
- Smart contract risk in ether.fi and EigenLayer
- Front-end spoof attack on the app frontend
- An economic design exploit in the design of eETH
- Pegged tokens like eETH can depeg but given the ability to withdraw from eETH, it’s unlikely
- Colluding…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
