Kelp DAO opens trading of the $340m EigenLayer airdrop market with KEP

DeFi users have flocked to restaking protocol EigenLayer and liquid restaking protocols recently due to a rising trend around of points — a wider trend in DeFi that typically heralds an upcoming airdrop. Users earn points — and free tradable tokens in the future — by using these protocols.

That has also given rise to a speculative market on points.

One of those liquid restaking protocols, Kelp DAO, launched on Wednesday the first tokenised representation of EigenLayer points dubbed Kelp Earned Points token, or KEP.

Liquid restaking protocols like Kelp DAO take user deposits, restake them in EigenLayer and provide the users with a receipt in the form of a new token, rsETH, which users can use elsewhere in DeFi.

One KEP from Kelp DAO is equal to one EigenLayer point. KEP is an ERC-20 token meaning it can be traded without any restrictions on decentralised exchanges, like Balancer.

Some 4.6 million KEP tokens have been claimed, out of over 152 million earned so far by Kelp DAO users.

Kelp charges a 0.5% fee on all KEP claims and plans to use these fees as extra incentives for rsETH restakers on its protocol.

EigenLayer points

EigenLayer is a new protocol on the Ethereum blockchain that introduces the concept of restaking, and it is expected to launch its mainnet in the second quarter.

On Ethereum, Ether is staked with validators to secure the network and process transactions. To run a validator, it requires a minimum of 32 Ether and some technical know-how.

Liquid staking protocols remove the capital requirement and technical skills, allowing users to stake any amount of Ether while holding a receipt token of their staked Ether, like stETH from Lido.

Restaking will enable the Ether that is staked to secure Ethereum, also secure other protocols. For doing this, restakers can expect to receive additional yields from the other protocols, in addition to the Ether staking yield they already receive.

EigenLayer depositors receive 24 points per day for every Ether they restake, and as of 6 pm GMT, there were 2 billion EigenLayer points in existence with 67 million points slated to be released each day.

Until today, the only way to trade EigenLayer points has been on Whales Market, but that market is inefficient.

Trades on Whales Market are not a tokenized representation of EigenLayer points, but rather, the rights to EigenLayer points when they launch. As a result, when a user wants to sell their EigenLayer points on Whales Market, they have to put a deposit down in Ether.

That prevents a seller from walking away from a trade if the value of the points are worth more than what they sold them for when EigenLayer points convert to a token sometime in the second quarter.

Still, over $2.6 million worth of EigenLayer points have been traded on Whales Market with an average buy price of $0.17, giving the total EigenLayer points market an estimated value of $340 million.

After the first two hours of trading, albeit on minimal volume, KEP is priced at approximately $0.17 per token, exactly the same price as the points traded on Whales Market.

There is only one liquidity pool live for KEP and it is paired with the liquid restaking token rsETH from Kelp DAO. There is $257,000 in liquidity in the pool with just under $70,000 in total volume.

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