Related to crypto “airdrop hunters,”  LRTs are gaining more popularity. Most of these investors have overleveraged exposure to the platforms’ ETH-pegged assets to increase their chances of obtaining a portion of the project’s token upon launch.

However, a lot of criticism arose when Renzo revealed that the first airdrop had only set aside 5% of the entire REZ token supply.

There was also discussion on the 2.5% token distribution to REZ’s Binance launch pool ‘farmers’ two days earlier than the distribution to ezETH holders. Sadly, ezETH holders benefitted from this since it offered them the opportunity to offload their shares prior to the airdrop receiving parties.

This caused many ezETH holders to begin reducing their holdings. The depreciation was to happen as the traders tried to leave their ezETH positions, which currently do not allow withdrawal to the underlying assets directly. Hence, they had to draw from Blast’s $200 million liquidity pool, which was a layer-two Ethereum network.

A ‘liquidation cascade’ ensued as a result, with DeFi lending platforms automatically resolving leveraged holdings featuring ezETH as collateral. More positions were liquidated as a result of this positive feedback loop, which further decreased the price of ezETH through the sale of collateral.

The price of ezETH briefly dipped to $700. A somewhat lower drop was reported by the credit agencies’ price oracle, which averages prices across several markets. Liquidation was limited to traders having a leverage of 5x or more.

DeFi Security Alert: Recent Losses and Liquidations

Losses were reported on protocol losses of $34,000 and $83,000, while liquidations were around $65 million each for Morpho and Gearbox (approximatelyPeckshield, a DeFi security company, reported that a fortunate individual recovered almost all his insured funds, while another individual unfortunately lost around $90,000 upon liquidating his $900,000 stake.

The other victim lost approximately $300,000 to a phishing fraud that was pretending to be the official Renzo X account.

P.S This is not investment advice.

The post Why Did ezETH Holders Begin Reducing Their Holdings? appeared first on Coin Engineer.

What is Renzo?

Renzo is a cross-chain liquid staking protocol built on the EigenLayer blockchain. It allows users to stake various assets like ETH and other liquid staking tokens (LSTs) across popular platforms including Ethereum, Arbitrum, and BNB Chain. Users who stake their assets on Renzo are rewarded with ezETH, which can further generate ezPoint rewards for potential future airdrops and restaking opportunities.

By optimizing capital utilization, Renzo empowers users to maximize their return on investment (ROI). Currently, Renzo ranks as the third-largest project in the Liquid Staking segment based on Total Value Locked (TVL), highlighting its growing popularity and user trust.

How Does Renzo Work?

Built on the innovative EigenLayer blockchain, Renzo functions as a Liquid Derivatives platform. It acts as a critical interface for the entire EigenLayer ecosystem by ensuring Actively Validated Services (AVS). This unique approach enables Renzo to offer significantly higher returns compared to traditional ETH staking methods.

To maintain balance, Renzo mints an equivalent amount of ezETH for every deposited LST or ETH. Designed specifically for Ethereum restaking, a previously underserved market area, Renzo leverages smart contracts and operational nodes for the effective implementation of restaking strategies. It also functions as an on-ramp and off-ramp for users entering and exiting the staking process.

The withdrawal process is influenced by restaking strategies and EigenLayer’s requirements, with a minimum duration of 7 days and variations depending on the chosen AVS. Importantly, Renzo guarantees users receive the total rewards generated by EigenLayer. User-paid fees contribute to the protocol treasury and compensate Renzo node operators.

In essence, Renzo not only provides an accessible entry point for users to explore Ethereum restaking, but also offers a clear exit strategy. This dual functionality positions Renzo as a valuable tool for anyone interested in maximizing their returns through Ethereum restaking.

Renzo ezPoints

Since the official Beta launch of Renzo on December 18, 2023, users holding ezETH in their wallets automatically earn 1 Renzo ezPoint per hour per ezETH held. Renzo also runs ezPoints promotions, such as offering an additional 200 ezPoints for every 1 ETH deposited within a specific timeframe.

However, Renzo strictly prohibits users from exploiting the system by repeatedly buying and selling ezETH to earn multiple rewards. Any user caught engaging in such activities will be excluded from the ezPoints program.

Here’s a breakdown of how users can earn ezPoints:

Holding ezETH: Users automatically earn 1 ezPoint per hour per ezETH held.

Providing Liquidity: Liquidity providers on DEX pools earn double the ezPoints (2x).

Referral Program: Users can earn 10% of the ezPoints generated by users they refer who join and deposit ETH into Renzo.

The system’s points accumulation feature incentivizes user activity and participation. This includes holding ezETH, providing liquidity on DEX pools, and referring new users to the Renzo platform.

The post What is Renzo? How Does Renzo Work? appeared first on Coin Engineer.