1. Project Introduction

Renzo is an innovative restaking DeFi platform. As an ecosystem project of EigenLayer’s Liquid Restaking Token (LRT), it serves as the gateway to the EigenLayer ecosystem, ensuring Active Validation Services (AVS) and offering higher returns than staking ETH.

Renzo simplifies Ethereum restaking and ensures the security of DeFi investments through EigenLayer: enabling ETH deposits to mint EZETH and using Active Validation Services (AVS) to protect applications built on Ethereum’s Layer 1 security protocols on EigenLayer. The Renzo protocol also provides a smooth interaction, making interactions between users and EigenLayer node operators more efficient, which is significant in the Ethereum ecosystem. This simplifies the inherent complexity of DeFi, achieving seamless interaction between users and EigenLayer node operators, thus enhancing the efficiency of the Ethereum ecosystem. Additionally, Renzo not only increases earnings opportunities for ETH stakers but also enhances the security and reliability of services within the Ethereum blockchain, marking a significant step in DeFi development. In short, Renzo’s core is to drive progress in permissionless innovation on Ethereum, striving for programmable trust acquisition throughout the ecosystem. Carefully designed, it promotes widespread adoption of EigenLayer by abstracting complex details and presenting user-friendly interfaces, thereby increasing engagement and participation.

2. Project Operation

The Renzo protocol operates through a well-structured mechanism, leveraging the EigenLayer framework to streamline the restaking process on Ethereum.

Here’s a concise explanation of how it operates:

1. Deposit and Minting: Users deposit ETH or Liquid Staking Tokens (LST) into Renzo, which then mints an equivalent amount of ezETH (a derivative representing the staked assets).
2. Ensuring AVS Security: Renzo ensures the security of Active Validation Services (AVS) on EigenLayer, allowing users to inject ETH and ensure the security of these services, thereby earning additional rewards beyond traditional staking rewards.
3. Strategic Management: As a strategic manager, Renzo optimizes the restaking process by selecting the best combination of AVS to minimize risks while maximizing returns.
4. Income Generation: The protocol generates income through ETH validators, and with the introduction of AVS, Renzo node operators inserting these services to generate restaking income.
5. Reward Distribution: The protocol captures rewards generated through restaking and ensuring AVS security, reflecting them in the value of ezETH tokens, and providing users with tokens that accrue rewards.
6. Enhanced Participation: Renzo introduces ezPoints and EigenLayer Points, rewarding user participation and contributions to the protocol’s success.
7. Governance and Decision-Making: Governance mechanisms, including snapshot voting and on-chain governance, guide strategic decisions, such as selecting AVS supported by node operators.

Through this multifaceted approach, the Renzo protocol offers Ethereum users a dynamic and beneficial restaking ecosystem, enhancing earning opportunities and network security.

3. Core Mechanism

3.1 EigenLayer protocol

EigenLayer is the core technological component of the Renzo protocol, providing a new hierarchical structure for the Ethereum network, making asset staking and network validation more efficient and flexible. EigenLayer’s design goal is to enhance the scalability and functionality of the Ethereum ecosystem by allowing existing Ethereum validators to utilize their staked assets to support new and innovative services. Here are several key aspects of EigenLayer within the Renzo protocol:

Hierarchical Validation: EigenLayer operates by creating an additional validation layer independent of the main Ethereum blockchain. In this layer, validators can participate in a wider range of network activities, such as specific computation tasks or new consensus mechanisms.

Resource Reuse: A core feature of this layer is allowing validators to reuse their staked assets on the Ethereum main chain. This means validators can support more services without additional staking capital, thus improving capital efficiency and lowering the barrier to entry for participating in new services.

Enhanced Network Functionality: Through EigenLayer, the Renzo protocol enhances the functionality of the Ethereum network, including data validation, transaction execution, and other potential services such as cloud storage or complex data processing tasks. These services, which may have required new infrastructure and additional resource investment, can now be achieved using existing validator assets.

Rewards and Incentives: Validators participating in EigenLayer can earn additional rewards derived from the services they provide in this layer. This not only increases their overall earnings but also encourages more validators to participate and promotes network growth.

Security and Decentralization: EigenLayer’s design emphasizes security and decentralization. Despite adding a new layer on top of the Ethereum main chain, it still maintains the decentralized nature of the network and ensures operational security through multiple validations and security protocols.

Community-Driven Governance: EigenLayer and the Renzo protocol support decentralized governance, where community members can influence key decisions through voting, such as adding new services or adjusting reward mechanisms. This ensures protocol transparency and adaptability, allowing it to respond to community needs and changes.

By introducing EigenLayer, the Renzo protocol provides a mechanism for the Ethereum network to not only support existing staking and validation operations but also expand to more applications and services, further enhancing Ethereum’s position as a leading global smart contract platform. This technological innovation is crucial for driving the long-term development of the Ethereum network and the advancement of decentralized finance (DeFi).

3.2 Ethereum stakers

3.2 Ethereum stakers are ETH token holders who choose to stake their assets to earn rewards and maintain network security. These users interact with smart contracts on the Ethereum network to support multiple networks with their assets. While they benefit from staking their assets, they also face the risk of being slashed if they choose the wrong validator to stake with. Slashing is a punishment for validators engaging in malicious activities or not meeting the standards set by the Ethereum network. Users staking with malicious validators risk losing their staked funds. 3.3 Active Validation Services (AVS) are a core feature of the Renzo protocol aimed at enhancing the functionality and security of the Ethereum network. AVS allows stakers to increase their earnings by participating in additional validation activities while providing value-added services to the network.

services to the network.

These services are implemented by Renzo through the EigenLayer framework, and here are some key aspects of AVS: 1. Purpose of AVS The primary purpose of AVS is to expand the functionality of the Ethereum network, allowing nodes to participate in activities beyond traditional block validation that benefit the network. These activities may include data validation, network security operations, specific computational tasks, and more. 2. How it Works In the Renzo protocol, stakers can choose to participate in different AVS projects. This typically involves locking their staked assets (such as ETH) into specific services that require additional validation activities to maintain their operation and security. In this way, stakers support not only the fundamental functions of the Ethereum network but also provide support for other layers and services. 3. Reward Mechanism Stakers participating in AVS can earn additional rewards derived from the value-added services they provide to the network. This means that, in addition to the basic staking rewards, stakers can significantly increase their overall return rates by participating in AVS. 4. Risk Management While participating in AVS can provide higher returns, it may also entail additional risks such as technical failures, service interruptions, or network attacks. Therefore, the Renzo protocol incorporates risk mitigation measures such as diversifying AVS projects and implementing high-standard security protocols. 5. Governance and Selection The selection and approval of AVS projects are typically done through decentralized governance processes, meaning that community members (including stakers) can vote to determine which services should be included in the protocol. This ensures transparency and community involvement in the project. 6. Technical Implementation Technically, AVS is implemented through smart contracts and the EigenLayer framework, where these contracts define the specific parameters, reward distribution, and participation rules of the services. This structure allows for flexible service management and automated reward distribution. Through Active Validation Services, the Renzo protocol not only enhances the potential earnings of stakers but also brings more functionality and value-added services to the Ethereum ecosystem. These services contribute to improving the efficiency and security of the entire network and also drive the development of decentralized finance (DeFi) and other blockchain applications.

3.4 Cross-chain restaking, one of the innovative features of the Renzo protocol, allows users to reuse staked assets across multiple blockchains, further enhancing capital efficiency and facilitating participation in multiple blockchain ecosystems.

Here are the key aspects of the cross-chain restaking mechanism in the Renzo protocol: 1. Definition of Cross-Chain Restaking Cross-chain restaking allows users to utilize their staked assets, such as ETH, on one blockchain (such as Ethereum), for related activities on another blockchain without withdrawing the original stake. This is achieved by creating a derivative asset (such as EZETH in the Renzo protocol) representing the original staked asset, which can freely circulate and be used on other chains. 2. Improvement in Capital Efficiency Through this mechanism, stakers can participate in staking and governance activities of more blockchain projects without increasing additional capital investment. This not only improves the efficiency of existing capital usage but also enables users to explore new investment opportunities and revenue sources. 3. Technical Implementation Renzo utilizes advanced cross-chain technologies such as bridging and locking/unlocking mechanisms to ensure the secure movement of assets between different chains. The user’s original assets are locked on one blockchain while an equivalent proxy asset is generated on another blockchain, inheriting certain properties and rights of the original asset. 4. Risk Management: While cross-chain restaking offers many benefits, it also brings certain risks such as cross-chain bridging security issues and liquidity risks. The Renzo protocol incorporates corresponding security measures such as multi-signature and smart contract audits to mitigate these risks. 5. Governance and Automation Cross-chain restaking typically involves complex governance structures as it must address interoperability issues across multiple blockchains. The Renzo protocol may include automated governance tools, allowing users to efficiently manage their staking and voting rights across multiple chains. 6. Ecosystem Collaboration The successful implementation of cross-chain restaking relies on collaboration with other blockchain projects and protocols. The Renzo protocol ensures widespread acceptance and usage of its cross-chain functionality by establishing partnerships and compatibility standards. Through cross-chain restaking, the Renzo protocol not only strengthens its position as a multifunctional DeFi platform but also pushes the boundaries of blockchain technology, enabling users to seamlessly operate and add value in multiple blockchain ecosystems globally. This technological advancement opens up new possibilities for the future development of decentralized finance.

4. ezETH Token

ezETH is Renzo’s liquidity restaking token, allowing users to restake while maintaining liquidity. When users deposit ETH or other approved tokens, they receive ezETH tokens in return, which have a similar value and can be used for trading. ezETH tokens are reward-bearing tokens, so as the underlying assets and the rewards they earn increase, their price also increases. These earned rewards can be in the form of ETH, USDC, and AVS reward tokens. Users can also withdraw their staked tokens and rewards. The withdrawal of assets involves unstaking the deposited assets, depending on the restaking strategy and EigenLayer’s unstaking protocol. The withdrawal process takes a minimum of seven days, depending on the aforementioned factors. ezETH tokens cannot be withdrawn directly. Instead, users can sell their ezETH to a balancer, which converts ezETH tokens into ETH. This is why the circulating supply of the token is zero, while the total supply is 282,469 ezETH.

5. REZ Token

The REZ token plays a crucial role in the Renzo ecosystem, enabling holders to participate in the protocol’s decision-making process, thereby collectively determining the direction of protocol development and the implementation of key features.

5.1 Characteristics and Functions of REZ: 1. Governance REZ is used for voting on various issues such as protocol updates, fee structure adjustments, and adding new features. This governance model promotes decentralized decision-making, ensuring that protocol development aligns with community interests. 2. Reward Mechanism REZ may also serve as a reward mechanism, incentivizing users to participate in protocol maintenance, operations, and other contributions. This includes providing liquidity, participating in validation processes, or completing specific tasks. 3. Trading and Liquidity As a tradable digital asset, REZ can be bought and sold on various cryptocurrency trading platforms, providing users with channels to enter and exit the Renzo ecosystem. Its market price may fluctuate based on market supply and demand, protocol development, and overall cryptocurrency market conditions. 4. Protocol Security and Participation Users holding REZ may participate in protocol security mechanisms, such as providing additional security to the network by staking REZ or assisting in maintaining the protocol’s normal operation by participating in specific network activities. 5. Economic Model REZ is a critical factor in designing the economic model. These parameters need to be carefully designed to ensure the protocol’s long-term sustainability and economic security. 6. Community Building REZ facilitates interaction among users and fosters a sense of collective responsibility for the protocol. As a cornerstone of the Renzo ecosystem, REZ not only provides a mechanism for financial incentives and governance but also serves as a bridge connecting community members, developers, and users, collectively driving protocol development and innovation.

5.2 Supply and Circulation: The total supply of REZ is 10,000,000,000, with a circulating supply of 1,050,000,000 (approximately 10.50% of the total token supply) after listing. The allocation from the Binance Launchpool is 250,000,000 (2.50% of the total supply), with the Binance Launchpool starting on April 24, 2024.

5.3 Token distribution

• Binance Launch Pool: 2.50% of total token supply
• Airdrop: 10.00% of total token supply
• Investors & Advisors: 31.56% of total token supply
• Team: 20.00% of total token supply
• Base: 13.44% of total token supply
• DAO Vault: 20.00% of total token supply
• Liquidity: 2.50% of total token supply

It’s worth mentioning that as a restaking platform, Renzo has several participating protocols within its ecosystem, allowing you to stake your ezETH into their products and increase your earned Renzo points, some of which provide double rewards. These protocols include Pendle, Linea, and Ionic. The entire list can be found at https://app.renzoprotocol.com/defi. Some participating protocols do not have tokens, so interacting with them can increase your chances of qualifying for any potential future airdrops from those protocols.

6. Team/Partnerships/Funding Background

Renzo Protocol was founded by Kratik Lodha and Lucas Kozinski in 2023 as a bridge to EigenLayer Protocol for secure ETH restaking. The mainnet of Renzo Protocol was launched on October 30, 2023, accepting deposits and staking of native ETH tokens. By January 14, 2024, Renzo Protocol successfully raised a seed funding of $3.2 million, resulting in its valuation reaching $25 million. Maven11 led this seed funding round, with participation from OKX Ventures, Robot Ventures, Protagonist, Bitscale Capital, Re7 Capital, Mantle Network, and Karatage, among others.

On February 21, 2024, Binance Labs also invested in the Renzo Protocol, although the investment amount was not disclosed. The protocol aims to develop its mainnet, surpassing ETH restaking, and accepting deposits of wrapped ETH (wBETH) and other ETH liquidity staking tokens (LST).

7. Project Evaluation Analysis

7.1 Track Analysis The Renzo Protocol is primarily active in the decentralized finance (DeFi) sector, focusing on staking and restaking services. Renzo enhances Ethereum’s staking efficiency and security by offering restaking mechanisms, cross-chain functionality, and innovative technology involving EigenLayer. Here are some projects similar to Renzo that also offer staking or related services in the DeFi space: 1. Lido Finance Lido is a decentralized staking solution that provides liquidity staking services for Ethereum and several other blockchain assets. Lido allows users to stake their cryptocurrencies while maintaining asset liquidity, similar to Renzo’s restaking functionality, but it focuses more on simplifying the staking process and providing corresponding liquidity tokens (such as stETH). 2. Puffer Finance Similar to the Renzo Protocol, Puffer Finance is also a native restaking platform that allows users to become Ethereum validators without staking 32 ETH. While both protocols are important players in the liquid restaking field, they have different focuses. Puffer Finance focuses on maximizing growth using validator rewards, while Renzo Protocol focuses on diversifying ETH staking. Puffer Finance uses validation tickets to maximize profits, whereas Renzo Protocol reduces costs through cross-chain capabilities while supporting mainstream liquidity staking tokens (LST) and Layer 2 solutions. 7.2 Project Advantages One major advantage of the Renzo Protocol is the integration of the ezETH token to increase yield. ezETH token allows users to restake assets across multiple projects, resulting in higher yields than traditional staking. Another advantage is cross-chain capability, which simplifies the staking process. Additionally, the user-friendly interface provides a lower-cost, better experience for users. The project may also offer multi-token support for wBETH and LST for other projects in the future. Using EigenLayer, the Renzo Protocol can provide a secure and trustless staking experience. 7.3 Project Disadvantages One disadvantage of the Renzo Protocol is the lack of transferability of ezETH tokens, resulting in zero ezETH tokens in circulation. This reduces users’ ability to transfer ezETH assets from compromised wallets to more secure ones. Another drawback is the long asset unlocking period. During this period, unlocked assets will be restricted, limiting users’ ability to access funds during the unlocking period, potentially causing users to miss out on valuable profit opportunities. Additionally, the protocol faces challenges with smart contract vulnerabilities. As a new project, the Renzo Protocol relies on a series of smart contracts (including EigenLayer). Any vulnerability in any smart contract could lead to the project’s suspension. Another challenge is the volatility of the cryptocurrency market, the instability of ETH asset prices, and the uncertainty in the cryptocurrency field. These factors can affect users’ willingness to interact with Renzo or participate in staking.

8. Project Summary

In summary, the Renzo Protocol represents a significant leap forward in the DeFi space, simplifying Ethereum restaking through innovative methods, streamlining user participation, and maximizing returns. By directly connecting users to the EigenLayer ecosystem, Renzo not only enhances efficiency but also ensures the security of the blockchain. Its recent successful funding reflects strong market confidence, highlighting Renzo’s role in making DeFi more accessible and valuable. Considering its pros and cons, the Renzo Protocol also has significant growth potential in the DeFi space, particularly in providing innovative staking solutions and enhancing Ethereum network efficiency. However, its success will depend on technological innovation, market acceptance, and regulatory developments.

Disclaimer：

1. This article is reprinted from [链茶馆], All copyrights belong to the original author [茶馆小二儿]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.