With recent posts regarding the Amore incentive program, it is important that the Renzo Protocol gets the most out of this season for the incentives it is dishing out. When examining point multipliers for certain protocols, it appears that Renzo may not be optimizing deposits to key protocols that will truly help both Renzo and the protocols in a mutually beneficial way. Therefore, the objective of this forum post is to briefly analyze where current incentives are directed and open up the possibility to the community for redirecting incentives towards more effective programs.
When analyzing the protocol specific flows, you can notice sizable outflows the biggest of which come from Pendle and Zircuit.
On a growth rate basis, from the end of Season 1 to the end of Season 2, all protocols in the query saw a negative growth rate aside from Curve, Karak, and Swell L2 deposits.
When examining the L2 data, we can also see large drawdowns for Blast and Mode, two L2s which had their respective snapshots during these seasons. Both experienced significant decline in ezETH TVL on both a dollar and unit basis.
BNB, Blast, and Base provide the least TVL of the chains that support ezETH. It’s also important to note that Mode is trending in the same direction as Blast, but in a slightly less aggressive manner.
When looking at the volume across all chains, there are some notable laggards, similar to what we have seen with TVL metrics, primarily across BNB, Base, and Blast.
However, volume alone doesn’t tell the full story, so for a better understanding of chain usage, we can examine the Volume : Liquidity utilization ratio, smoothed out across a 7 day moving average, and charted at a Log Scale for added context.
When we examine DEX specific volume on a monthly basis, it is evident that Uniswap is beginning to eat into Balancer’s dominance, along with Curve, which as we mentioned earlier, is one of the only protocols to show a positive growth rate in TVL from Season 1 to Season 2.
Actionable Next Steps
As the Amore incentive program begins, we believe that the key to success for Renzo lies in being able to effectively grow the protocol through intentional, data driven ezPoints multipliers. With 1% of the REZ supply being earmarked for liquidity incentives in this program, it may be in the protocol’s best interest to double down on the liquidity venues and chains that are growing, and consider ending, or greatly decreasing, point multipliers towards chains and protocols that are not.
Candidly speaking, it is difficult to discern why Blast, BNB, Base, and Mode should continue to be incentivized. It is clear that Ethereum mainnet and Arbitrum have DeFi power-users and communities that welcome assets such as ezETH, and perhaps will do the same for pzETH. While Linea has held up quite well with regards to TVL, it is of course important to acknowledge that users may be motivated by exogenous factors such as a potential airdrop. To our understanding, any potential airdrop is unlikely in the short term, but this may build a false presence of activity and growth on the chain nonetheless.
It should of course also be mentioned that due to the launch structure of EigenLayer, there were plenty of layered incentive games being played, with users highly motivated to deposit and interact with multiple different platforms for various points programs. Additionally, with slashing and rewards not being live during either season, market participants are now digesting and re-distributing their capital to better reflect the newfound rewards, and future perceived risk across various LRTs.
We ask that the foundation and core contributors to the protocol carefully examine the data presented in our analysis, as well as any other additional data points that they may have access to, in order to make optimal incentive decisions with regards to multipliers. However, it is also important to note that our analysis is imperfect, lacking Mode onchain activity, and perhaps not capturing all the protocols where ezETH is being directed to. These unlabeled protocols would of course fall into the “unlabeled” category.
Attached below is a list of integrations that the foundation and core contributors should look at when deciding to change ezPoints multipliers. Many of these protocols have low utilization and don’t benefit the protocol as much as they should.
Aerodrome, Base - ezETH/WETH (Stable + Volatile)
Curve, BNB - ezETH/WETH
Extra Finance, Base - ezETH/WETH
F(X), Ethereum mainnet - ezETH/WETH
Kinza, BNB - ezETH/WETH
Lista, BNB - ezETH
Molend, Mode - ezETH
Pac Finance, Blast - ezETH
PancakeSwap, BNB - ezETH/ETH
Syn Futures, Blast - ezETH
Uniswap, Arbitrum - ezETH/wstETH
Prisma, Ethereum - ezETH
zkLink, Blast - ezETH
DTX, Blast - ezETH
We look forward to further engagement with the community and relative stakeholders on this crucial topic.