Airdrop Farming July 2024, Part 1: Restaking
This week was one of the most eventful weeks in airdrop history, with ZKsync, LayerZero, and EigenLayer all distributing tokens to farmers from the past couple of years. It is time to re-evaluate market conditions, available opportunities, and estimated returns to find the next best airdrop farms. Part 1 will focus on restaking protocols; stay tuned for part 2 and a general overview of all available opportunities!
ZKsync and LayerZero are likely the last two airdrops to reward users for simply executing transactions. The meta has changed to points-based airdrops in the past year, where protocols reward users based on their liquidity or volume rather than transaction count. Though this was great while it lasted, it rewarded industrial airdrop farms heavily and was easy to exploit, so it was not expected to last forever. Points reward users who dedicate money and time to projects, and though this favors whales, it also helps those who only farm a few high-conviction strategies with most of their crypto funds.
Even though EigenLayer’s Season 1 is complete and Season 2 is expected to wrap up within the next couple of months, they have a third season that will see an additional 5% of the supply allocated to ETH restakers. EigenLayer and associated restaking protocols like EtherFi, Renzo, and Swell have been some of the best-performing airdrops of the year. Subsequent airdrops after the first typically do not perform as well, but EigenLayer points for the second season are estimated to be around 5 cents, meaning each ETH staked earns around $1.20 per day. EtherFi points are at .00005 cents with 10,000 points per ETH per day, adding 50 cents daily.
Farming by directly depositing into EtherFi or another LRT is a straightforward way to earn points, but several strategies can supercharge yield at varying levels of risk. EtherFi’s website has a list of options, including providing liquidity on an ETH/weETH pair, borrowing or lending the liquid restaking token, and numerous other options. These provide a protocol-given boost and generally result in higher point accrual.
Though EigenLayer is the biggest and most established restaking protocol, two legitimate competitors have emerged to challenge its throne. Karak and Symbiotic accept other assets beyond ETH, like Ethena’s USDe, and have been steadily growing in popularity and TVL. Symbiotic, released a couple of weeks ago, is supported by Lido, the largest liquid staking provider on Ethereum by a large margin. The strategies for Karak and Symbiotic are very similar to those of EigenLayer, though they come with a higher risk-reward ratio since their fair market valuations have yet to be established. Additionally, this market would exhibit winner-take-most dynamics since whichever protocol offers the most security and is best regarded will be the solution for builders. With EigenLayer’s massive advantage in TVL, partnerships, and first-mover status, beating it will certainly be a challenge. Of the two, Symbiotic seems better positioned to compete thanks to collaborations with Ethena, LayerZero, Lido, and others.
Pendle Finance is the ideal protocol for users looking to go completely risk-off or maximize their eventual token reward. It separates a yield-generating token like restaked ETH into two components: its principal value on a certain date and the value of all yield and points generated by then. For example, a Pendle weETH token with a July 1 expiry date would have two parts: PT-weETH, which trades at a discount until July 1 but is always eventually worth the same as weETH, and YT-weETH, which accrues all ETH staking, restaking, and points rewards. This is a great way to leverage exposure to points or substitute points for fixed, guaranteed ETH yield. This will probably be the best way to quickly increase ETH holdings, as the current fixed APY rates on Symbiotic are over 50% and over 30% for EigenLayer.
Restaking protocols are some of the fastest-growing protocols on Ethereum and are some of the best places to hold ETH for the rest of the year. For those looking for high-risk, high-reward opportunities, leveraged restaking on Symbiotic or Pendle’s yield tokens are a great choice. For more conservative farmers hoping to generate a safe annual return on ETH, principal tokens on Pendle are the only option with a fixed return. For everyone else with varying levels of risk and belief in restaking, there are a wide variety of options on several different liquid restaking tokens with exposure to numerous protocols.
In the next article, we’ll cover airdrop farming on other protocols and how it is possible to farm several airdrops, including restaking protocols and LRTs, simultaneously in the most efficient manner possible.
By Lincoln Murr
