The liquid restaking protocol Renzo Airdrops has launched the token REZ, debuting with a market capitalization of 289 million dollars. In the first hour after distribution, the token recorded a trading volume of 75 million dollars.
Let’s see all the details below.
Summary
The explosive debut of Renzo Aidrops’ liquid restaking protocol: REZ token
As anticipated, the Renzo liquid restaking protocol has opened requests for the airdrop of its native token, REZ, which debuted with a market capitalization of 289 million dollars, according to CoinMarketCap.
The initial circulation of the REZ token is 1.15 billion units, while the remaining 8.85 billion are locked until various criteria are met.
Among the token distribution, 31% is reserved for investors, 32% for the community, and 20% for the main contributors, who must adhere to a one-year lock-up and a two-year vesting period.
Renzo is a protocol that serves as a bridge for EigenLayer, protecting actively validated services (AVS).
When users stake ether (ETH) on the platform, they earn a return and automatically receive ezETH, Renzo’s liquid restaking token.
This can be used to generate higher yields on various decentralized finance protocols (DeFi).
Users who accumulate more than 500,000 ezPoints, obtained by staking on Renzo after the protocol’s launch in January, are subject to a 50% lock-up for a maturity period of three months.
Renzo declared on Twitter that the REZ token was not yet available for trading on any decentralized exchange.
However, according to the data from Dextools, the official token contract, published on Renzo’s website, had recorded a trading volume of 75 million dollars one hour after the opening of requests.
The sudden collapse of ezETH and its consequences on Renzo
The Renzo liquid staking protocol has seen impressive growth in 2024, reaching a peak of just over 1 million ether in deposits, worth approximately 3.3 billion dollars.
This growth has been largely driven by point programs that have encouraged users to deposit ETH directly into Renzo and participate in more speculative opportunities.
Partnerships with other DeFi protocols, such as Morpho and Gearbox, have encouraged holders of Renzo’s liquid staking token ezETH to use leverage strategies to increase their points.
Understanding the “looping” mechanism in which ezETH is used to borrow ETH, which is then reinvested in ezETH to increase yields.
However, recently, a perceived error in the upcoming airdrop allocations has caused a sudden wave of ezETH sales. Breaking the correlation with ETH and leading to mass liquidations.
This has caused significant losses for some users, with Gearbox co-founder, Ivan GBI, confirming that anyone with a leverage greater than 6x has been liquidated.
The main problem was the lack of liquidity, as ezETH is backed by ETH put in staking. However, the process for redemption and return takes time, and Renzo had not yet enabled withdrawals.
The only quick option to access the underlying ETH was through on-chain liquidity pools, which however can become unstable with a few significant movements.
Mike Silagadze, co-founder of EtherFi, explained that even just one out of a thousand users deciding to redeem can destabilize these pools. Leading to panic and breaking the correlation between ezETH and ETH.
This event has demonstrated the risks associated with liquid staking protocols and the need for more solid and resilient liquidity structures.
