Below is an analytical guide on all you should know if you've ever considered investing in DeFi projects such as the Renzo Protocol. This isn't a guide on if you should buy or sell but aims to identify upcoming crypto projects so potential investors can make informed decisions on the numerous cryptocurrencies in the marketplace. Let's dive in...
Since the birth of bitcoin, crypto has evolved with smart contracts, NFTs, the metaverse, Web3 and other prominent tokens, such as Solana, Cardano, Avalanche, stating improvements or enhancements in blockchain functionality. One such development involves Ethereum's evolution to Proof-of-Stake and restaking.
In less than six months, the Eigen Layer project has seen over $16 billion in Ethereum deposits, cementing the narrative of the growing interest in blockchain restaking. However, shortly after its launch, cryptocurrency depositors soon began to face issues of locked liquidity for a seven-day withdrawal period. Today, the Renzo protocol is the main driver for better restaking reward strategies and liquidity for crypto project investors. How? You'll find out more in this article, including how Renzo protocol works and its use case.
Introducing Renzo Protocol - Crypto Liquid Restaking
Imagine your Ethereum (ETH)-staked assets not just multiplying but also actively contributing to the security and efficiency of other blockchain networks and generating more rewards while at it. These are the numerous possibilities that the Renzo project brings on board. Renzo was introduced in early December 2023 on Eigen Layer to tackle the drawback of access to liquidity when restaking.
It was designed to be a liquid staking token (LST) and strategy manager on the protocol to promote better adoption. Before it was introduced to the market, Eigen Layer restaking was the year's innovation, but it came with a 7-day withdrawal delay timestamp due to security and efficiency reasons. Renzo's launch sought to eliminate this challenge, introduce increased yield opportunities, better staking strategies, boost security, and eliminate complexities for ETH stakers.
How Does Renzo Work?
Users deposit ETH/LST and get to mint in the equivalent amount of $ezETH. $ezETH is the network's liquid staking token. Stakers can also generate earned points by simply holding this token. They can access EigenLayer AVSs, the best risk/reward restaking strategy for their portfolio. AVSs, which are known as actively validated services in the Eigen layer, are decentralized services or applications on the platform using Ethereum's security.
These applications could come in varying forms, including oracle networks, bridges, coprocessors, share sequences, and more. When exploring the restaking opportunities, users will need to make decisions on which of the available AVSs to secure. Considering that these systems all have varying risk/reward (R:R) possibilities, Renzo helps simplify this process, allows users to decide the best R:R, and makes the best choices for them.
Company, Founders and Investors
Renzo is a private company founded by James Poole and Lucas Kozinski in 2023. It is headquartered in New York, United States. According to Crunchbase, it has had four seed rounds, with $23.4 million generated in funding. Their latest funding happened on June 18, 2024, from a series A round, which raised $17 million. The company has 22 investors, with four lead investors, which we'll discuss below.
Binance Labs
Binance Labs is the venture capital and incubation arm of the Binance ecosystem and has invested in many upcoming projects over the years. It has contributed to 143 investments, and Renzo recently became one of these projects. The project emerged as Binance Labs' second venture into the Ethereum ecosystem and restaking domain. The deal was signed in February 2024.
Galaxy Digitals
Galaxy Digitals is a technology-driven investment firm providing financial solutions to the expanding digital assets community since 2018. It has made over 121 investments in the community so far, with Renzo being one of the latest. In June, the liquid staking project secured millions from Galaxy and some other investors to expand its staking services.
Maven 11 Capital
Maven 11 is a fund designed solely for investing in blockchain and distributed ledger technology (DLT). Data from CrunchBase shows that it has over 75 investments in the market and is located in Amsterdam, Netherlands. Maven 11 was one of the investors that contributed to the $17 million accumulated funds in Renzo's latest Series A funding round.
BH Digital
Brevan Howard Digital is a global alternative investment management platform specializing in managing institutional investors' assets. They work with sovereign wealth funds, corporate and public pension plans, and more. The company has spearheaded 32 investments and recently added Renzo to its portfolio.
Token Release Plan and Vesting Schedule
The Renzo's season 1 ezpoint campaign ended on April 26, 2024, after the network's native token, $REZ, was launched. $REZ launched on April 30, and users' eligibility was based on the amount of ez points they accumulated in their wallet during the campaign. The maximum eligibility at this time was 360 points in a wallet. Some highlights from the Season 1 campaign are:
● $3.5 billion in deposits
● 33.5% restaking market share
● Top 10 DeFi protocols by TVL
● 250k+ users
The Renzo ecosystem has a lot planned for its community, and the vesting schedule will be applied to the biggest recipients of the project's offerings. The vesting on the network is designed to allocate rewards accordingly, especially for long-term participators. Below is a detailed overview of the network's tokenomics and currently has a market cap of $111m with a Fully Diluted Value (FDV) of $973m.
Ticker: $REZ
Total Supply: 10,000,000,000
Initial circulating supply: 1,050,000,000\
Allocations
● Investors allocation is 31.56%.
The allocation for investors signifies the token entitlements received by those supporting the development of the Renzo protocol. Investor tokens are under a 2-year lockup period, starting with a 1-year cliff, followed by a 10% unlock and subsequent vesting on a linear monthly basis for the remaining year.
● Community allocation is 30%.
The initial 5% of tokens were distributed to Renzo users during Season 1 of the ezPoints Campaign. The remaining tokens will support diverse community initiatives, such as the second season of the incentive campaign and various cross-chain projects managed by a DAO-controlled multi-signature wallet.
● Core contributors will get 20%.
This allocation is dedicated to distributing tokens to the Renzo Labs team and advisors involved in developing the protocol for the launch of ezETH. All core contributors' tokens are subject to a one-year cliff, followed by a two-year vesting period with monthly linear releases. All tokens for core contributors will be unlocked after the completion of the one-year cliff period.
● Foundation allocation is 13.44%.
This will be used to fund initiatives designed to expand the ezETH's reach.
● Binance Launch Pool: 2.5%
● Liquidity: 2.5%
Token Utility
The $REZ token will power all decentralized governance activities on the network. It will be used to vote on essential network initiatives and decisions, and holders of this token will be eligible to be a part. Some of these decisions will include risk management frameworks, operator whitelisting, AVS whitelisting, treasury and community grants, etc.
Renzo Socials- Twitter and Discord
The Renzo project's X account is @RenzoProtocol, and its follower growth is currently at 112,400. The account is an excellent place to get the latest community developments, news, and events updates. It also links to the restaking website of the platform. There has been a marked increase in followers since its inception in December 2023 (twitterscore.io), with significant growth being seen from February.
The platform's Discord channel has 51,000+ members and channels for community engagement, announcements, guild, and network suggestions. The community is generally positive, active and well moderated.
Pitch Deck
Renzo repeatedly emphasized better reward risk strategies, transparency, security, and many more for the Eigen Layer ecosystem. Since Restaking is a reasonably recent blockchain technology innovation, the project got the attention and head start needed to propel its growth. The project stands out due to its rare multi-chain functionalities, which allow users to explore multiple assets and blockchain environments. The major features Renzo introduced are:
● Deposit and mining
● Securing AVSs
● Strategic Management
● Yield generation
● Rewards Distribution
● Enhanced participation
● Decentralized Governance and decision making
Competitor Analysis
We've highlighted the newness of the liquid restaking crypto market in the crypto space, and the growing interest in this new venture has sparked some competition. Renzo faces stiff competition in this market with already established platforms like EtherFi and many other blockchains.
Etherfi
EtherFi comes up first because it's the largest Restaking protocol in the market, with a TVL of $6.4 billion at the time of writing. EtherFi leverages Ethereum's proof of stake to boost secure transactions across other networks. The eETH token allows users to restake their assets and explore participants across other DeFi networks.
EtherFi's collaboration with EigenLayer also boosts its functionalities, enabling ETH stakers to contribute to Ethereum-based software modules. The project became more prominent following its $23 million Series A funding round. According to Crunchbase, it has secured $32.3 million in funding from 22 investors in over three rounds. There are several other notable projects making rounds with similar offerings to Renzo, and they are discussed below.
Pendle
Pendle Finance is a DeFi protocol that enables users to tokenize and trade yields. Its primary selling point is that it allows stakers to tokenize yield-bearing assets and divide them into principal and yield tokens. For instance, by depositing wstET, pendle gives back PT-wstETH and YT-wstETH, representing the principal and yield components, respectively. Pendle has raised $3.7 million and has 23 total investors.
Restake Finance
Restake Finance is designed to be the first modular liquid staking platform on EigenLayer and poses some competition to the Renzo protocol in product offerings. The network works quite similarly to the $REZ ecosystem. By depositing LSTs, users get their staking token, rstETH, which is fully backed on a one-to-one basis by stETH.
Puffer Finance
Puffer Finance also capitalizes on the EigenLayer network, introducing its native liquid restaking protocol. By depositing ETH, users get the pufETH, a staking token that has the potential to generate two earnings: POS and staking rewards. The project holds more similarity with $REZ in its strong backing from Binance Labs.
Conclusion
In conclusion, Renzo Protocol appears to be a promising new player in the liquid restaking crypto market. It offers a unique combination of features, including better reward-risk strategies, transparency, security, and multi-chain functionalities. While it faces competition from established players like EtherFi, Renzo's strong backing from VC firms and its innovative approach position it well for future growth.
A central focus of investor activity in the cryptocurrency space is the evaluation of new crypto projects to invest in, particularly those with huge potential. This blog provides insight into what new ventures are benefiting from venture capital support (VC funding in crypto). These new crypto projects, funded by professional investors, can dictate the next narrative in crypto and the next big crypto movers.
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