Introduction

Yields are the biggest narrative in DeFi. It doesn't matter how you earn them, they're the holy grail everyone's chasing. It's like Darwin's theory, but instead of survival of the fittest, it's survival of the yieldiest. We've all been taught that chasing the highest yield leads to passive income and financial freedom. And now, the latest playground for these tempting yields is the restaking market.

Loop Protocol steps into Ethereum's restaking scene with a clear goal: to provide credit, improve liquidity and (de)generate yield. While LRTs and especially Pendle LRT LPs are gaining traction, Loop aims to offer a secondary market use case that improves capital efficiency even further. It‘s like Inception: we need to go deeper.

Loop’s Role in the Restaking Market:

Loop acts as a Credit Hub for Ethereum Restaking. A lending market tailored to ETH-denominated carry trades based on LRTs. Users can use various yield generating LRT receipts as collateral to borrow ETH and multiply their yield exposure while remaining price insensitive. By introducing attractive secondary market usage for LRT LPs, Loop enhances general capital efficiency and deepens the liquidity of the underlying LRT.

Importance of Restaking in the Ethereum Ecosystem:

Restaking is becoming a north star in Ethereum's DeFi landscape, causing rates to skyrocket all around! Currently 25% of total ETH supply is staked, and EigenLayer accounts for roughly 3.4%, equivalent to a hefty $15 billion.

EigenLayer's restaking narrative has become the hottest narrative in DeFi, offering shared security models for various services. The newborn liquid restaking landscape is booming, with billions in TVL flowing in.

Industry innovations:

Loop took a significant stride forward by introducing its YED (Yield-backed ETH Derivative), which is acting like a bond for a basket of LRTs, enabling a diversified restaking yield exposure. The receipt token of Loops YED is lpETH. Moreover lpETH can be staked for slpETH to receive a share of platform revenue, generated from the interest paid by loopers (borrowers).

Loop is opening the doors for delta-neutral leveraged yield farming on the fundament of DeFi‘s most promising sustainable yield source: ETH restaking yield. The looping process is fully automated and finalised in one transaction. In total loopers can be eligible to receive income from six different yield sources at the same time:

• Eigenlayer Restaking Yield

• LRT Emissions

• Pendle Swap Fees

• Pendle Emissions

• Loop Emissions (if eligible)

• Protocol Revenue Share (if eligible)

Conclusion

The future of Ethereum Restaking is bright. Due to the more attractive returns in comparison to native or liquid staking, it‘s likely for Restaking to attract similar if not even more capital. Loop positions itself at the forefront of Ethereum Restaking as the LRT Credit Hub. Adding capital efficient high yielding secondary market utility to the flourishing LRT sector.