Renzo Protocol ($EZ)?

9may...WMMw

23 Apr 2024

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Renzo is a Liquid Restaking Token (LRT) and Strategy Manager for EigenLayer. It is the interface to the EigenLayer ecosystem securing Actively Validated Services (AVSs) and offering a higher yield than ETH staking.

The protocol abstracts all complexity from the end-user and enables easy collaboration between them and EigenLayer node operators.
Renzo strongly advocates for EigenLayer and its goal of facilitating permissionless innovation on Ethereum, and programmatically acquiring trust for the ecosystem. Renzo is built to promote the widespread adoption of Eigenlayer.

How do LRTs work

Renzo is a liquid derivative platform built on EigenLayer. It serves as the interface to the EigenLayer ecosystem by securing Actively Validated Services (AVSs) and offering a higher yield than ETH staking.
For every LST or ETH deposited on Renzo, it mints an equivalent amount of ezETH.
Find more info on ezETH here
How it works:
Renzo is built to be primary on-ramp / off-ramp for Ethereum restaking, using a combination of smart contracts and operator nodes to secure the best risk / reward restaking strategy.

What are restaking strategies

AVS in Eigenlayer are decentralized services that will inherit Ethereum's security via EigenLayer.
A restaking strategy is a unique position where the user decides to secure one of the many AVS or a combination of them.
The number of strategies possible for securing an activity increases with the number of AVSs. Each AVS presents a unique entry point for rewards and relevant slashing risks, and the more AVS you have, the more diverse strategies are possible to secure them effectively.

This formula considers all possible combinations of securing AVS, from securing one to securing all AVS.
Consider a scenario with just 3 AVS - A, B, C. Number of strategies possible are

AVS A: Securing only AVS A
AVS B: Securing only AVS B
AVS C: Securing only AVS C
AVS A and AVS B: Securing both AVS A and AVS B together
AVS A and AVS C: Securing both AVS A and AVS C together
AVS B and AVS C: Securing both AVS B and AVS C together
AVS A, AVS B, and AVS C: Securing all three AVS simultaneously

In this scenario, there are 7 different strategies to secure the activity, based on whether you secure each individual AVS or their combinations.
We will also get 7 if we apply the above equation.
Now, as the number of AVS increases so will the number of strategies. In fact, this increases exponentially,
At 15 AVS we will have 32,767 strategies possible. As you can imagine, evaluating the right combination of AVS while optimizing for risk-reward and actively managing these positions gets more tenuous as more AVS join the network.

ezETH

ezETH is the liquid restaking token representing a user’s restaked position at Renzo. Users can deposit native ETH or LSTs and receive ezETH.

Rewards

ezETH is a reward bearing token similar to cTokens
The underlying restaking positions earn rewards which are reflected in the price of ezETH
- Rewards are expected in ETH, USDC and Actively Validated Services (AVSs) reward tokens.
This means the value ezETH increase relative to the underlying LSTs as it earns more rewards in AVS tokens
To mint ezETH, simply go to the renzoprotocol.com/restake and stake your ETH or LSTs

Withdrawals

Depending on the restaking strategies deployed, unstaking will take a minimum of 7 days, primarily due to EigenLayer unstaking requirements, but will vary depending on each AVS.
If the deposits and withdrawals are balanced, the rewards are equally distributed regardless of the asset being withdrawn.
If the deposits and withdrawals are unbalanced, while the principal will be withdrawn in whole the rewards are different for each asset incentivizing the balance based on the jump rate model

Transfers

Please note, ezETH withdrawals are not enabled. You are encouraged to supply liquidity or sell ezETH on Balancer, that offers a superior mechanism to convert ezETH into ETH for most cases. Visit the ezETH/WETH Balancer Pool.

Fees

Renzo passes 100% of any EigenLayer rewards
The fees will be split between protocol reserves (treasury) and Renzo node operators

Renzo ezPoints

See DeFi for more information on ezPoints boost multiplier across various DeFi Integrations.
Renzo points are meant to reward users who contribute to the success of the protocol. Starting with the Renzo Beta mainnet launch on December 18th, 2023, every participant in the Renzo ecosystem will receive points. The number of points will vary on the time duration and nature of participation.
The first way of receiving points will be by holding ezETH. Renzo rewards every participant that mints or holds ezETH in their wallet. ezETH holders receive 1 Renzo ezPoint per hour for every ezETH they hold. In addition, users will receive boosts for early participation.
Restake anywhere! Renzo offers a 100 ezPoints Boost per 1 ETH deposit until April 3rd, 00:00 UTC
Restake Ethereum on Mainnet, or Restake natively on Arbitrum, BNB Chain, Mode, or Linea, every 1 ETH deposit will receive 100 ezPoints boost!
ezPoints will accumulate to your ezETH balance and will show up in your portfolio immediatley.
!! Important !!
Looping — i.e. using the same ezETH to generate rewards multiple times by selling ezETH for ETH to repeat the process is strictly prohibited. Our system will be monitoring this and void you from the Boost and your ezPoints.
Example 1: If a user deposits 1 ETH into Renzo, they receive 1 ezPoint per hour plus any boosts as described above. If a user deposits 0.5 ezETH + 0.5 ETH in a DEX pool, they receive 2 ezPoints per hour. These accumulated points will be added to user balance pro rata and retroactively.
Referral system: Earn extra ezPoints by inviting other users who deposit ETH.
Referral tracking for L2 deposits will not be triggered until an initial deposit is made on Ethereum Mainnet by the referred user.

For each person who joins Renzo using your referral link, will earn an additional 10% of the referred users points. Example: If you refer to a user who earns 1,000 ezPoints you will earn 10% or 100 ezPoints for referring that user.
The key factor for earning these extra points is deposits made by the person you've invited. The more they deposit, the more ezPoints you accumulate.
The system is cumulative, meaning the more people you invite and who actively use, deposit ETH, on Renzo, the greater the number of ezPoints you can earn.

How do we do it

The Renzo Protocol is a layer over EigenLayer that users can interact with to abstract away the complexities of the protocol.
The smart contracts are set up in a way to allow delegation to multiple Operators in EigenLayer and also allow users to deposit Native ETH and LSTs.
Depositing and Delegation
When a user deposits native ETH, it is staked via an Ethereum Beacon chain validator node. The native ETH is held in the DepositQueue contract until the 32 ETH minimum is met. Once the minimum is met, the ETH is sent directly to the Beacon Chain Deposit Contract and the withdrawal credentials are pointed at the EigenPod in EigenLayer. This allows the ETH to earn staking rewards and also contribute to securing AVSs in EigenLayer, as shutting down the validator node would give the EigenPod the ability to withhold some of the ETH in case a slashing event occurred. The deposited ETH earns both Ethereum validator rewards and EigenLayer AVS rewards for the protocol.
Upgradeability
The EigenLayer protocol is currently in active development and interfaces are expected to change over time. In order to support these changes, the Renzo Protocol smart contracts are upgradeable via proxy contracts. The upgrade permissions are gated by a protcol multisig contract.