Introduction:
Binance Labs, the investment and incubation division of Binance with a valuation of $10 billion, has recently made an investment in Renzo, an Ethereum liquid restaking solution developed on EigenLayer. The amount invested remains undisclosed.
Following a successful seed funding round last month, where Renzo attracted $3.2 million at a company valuation of $25 million, Binance Labs' funding arrangement mirrors that earlier round's structure, combining equity and token warrants at a one-to-one ratio. This detail was confirmed by Lucas Kozinski, one of Renzo's founding members, in a conversation with The Block.
This investment represents Binance Labs' second venture into the Ethereum liquid restaking arena recently, having previously backed Puffer Finance, a protocol that we have looked at in our prior editions
Renzo Mechanics Overview;
ezETH represents a user's restaked position in the Renzo ecosystem, serving as a Liquid Restaking Token. Users can deposit either native ETH or Liquid Staking Tokens in exchange for ezETH.
Rewards:
- ezETH functions as a reward-bearing token
- The value of ezETH increases as the underlying restaking positions accumulate rewards, which are reflected in its price.
- Rewards are distributed in ETH, USDC and tokens from Actively Validated Services.
- The mechanism ensures that the value of ezETH grows in relation to the underlying LSTs through the accumulation of rewards in AVS tokens.
- To create ezETH, users can stake their ETH or LSTs at the Renzo protocol website under the restake section.
Withdrawals:
- The time frame for unstaking and withdrawing funds is subject to a minimum of 7 days, primarily due to the unstaking parameters set by EigenLayer, although the exact duration may vary based on the specific AVS involved.
- If the inflow and outflow of deposits and withdrawals are balanced, rewards are distributed evenly across all assets being withdrawn.
- In scenarios where deposits and withdrawals are not balanced, the principal amount is fully withdrawable but the rewards may vary for each asset.
Transfers:
- It is important to note that direct withdrawals of ezETH are currently not enabled. Users are advised to either provide liquidity or sell their ezETH on the Balancer platform, which typically offers an efficient way to convert ezETH into ETH.
Fees:
- Renzo allocates 100% of the rewards earned from EigenLayer.
- The collected fees are divided between the protocol's reserves (treasury) and the operators of Renzo nodes.
Since its inception, Renzo has accumulated $410,581,280 in Total Value Locked and has attracted 170,244 ezETH holders.
Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.