【Mellow Protocol】Permissionless and modularized LRT creation protocol / Released with support from Lido / Partnered with Symbiotic / @mellowprotocol

A fourfold yield is being offered, including points.

Good morning.
This is mitsui from web3researcher.

Today we researched the Mellow Protocol.

🔵What is the Mellow Protocol?
⚙️ Modularized LRT
🪜Lido supported release
💬Lido's aims and Mellow Protocol's vision

🔵What is the Mellow Protocol?

The Mellow Protocolis amodular infrastructure for permissionless LRT creation and curation.

The infrastructure allows for the free creation of LRTs (Liquid Restaking Tokens), but here is a brief look back at LRTs.

LRT stands for "Liquid Restaking Token" and is a token that proves restaking. A similar concept is LST (Liquid Staking Token). This is a token that proves staking.

LST was originally invented to meet the demand for staking income but to avoid having funds locked up, by issuing staking proof tokens to allow people to freely use their funds while earning staking income. Lido has spearheaded this movement and has established itself as the No. 1 DeFi

And the same phenomenon occurred when EigenLayer appeared and the re-staking wave appeared. LRT was invented to meet the demand of those who wanted to earn re-staking income but avoid having their funds locked up, by issuing re-staking proof tokens that would allow them to freely use their funds while earning staking income. fi, Renzo, Kelp DAO, etc. are well-known protocols.

↓For a more in-depth understanding, click here.

The Mellow Protocol is a protocol for creating LRTs, but it differs from existing protocols in that it is modular and can be used permissionless. The difference from existing protocols is that it is modular and can be used without permissions.

Simply put, the way LRT works today is that the LRT protocol deposits funds, which are delegated to the operator, who then selects an AVS and earns a yield.

However, the "Mellow Protocol" points out the problems with this mechanism.

That is the lack of proper risk control on the part of the user: the LRT is often a re-stake of the LST, resulting in a very complex risk structure. Multiple risks are stacked on top of each other, such as which AVS to lend to, and whether the smart contract for the LRT protocol is secure. And the user does not have much choice in which LRT to deposit, but must accept certain risks and trust the protocol.

The Mellow Protocol defines "correct" in the crypto world as follows

In cryptocurrency, "right" often means not choosing one or the other as a protocol. It is about allowing developers, integrators, and users to choose their own "right".

What risks to accept, what partners to work with, which operator to choose - all these choices are subjective and there should not be one central team that dictates the rules. Adopt modularity.
(Citation:Enter modular LRTs: MellowProtocol)

Simply put, the argument is that anyone can create an LRT, and users can examine and deposit risks from many LRTs, thereby diversifying the risks of LRTs and creating a permissionless and correct LRT market.

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⚙️ Modularized LRT

In the following section, we will explain how the "Mellow Protocol" works.

As mentioned above, a situation where one LRT leases to many AVS/Networks is undesirable because the entire market will be hit hard when thrashing occurs on that LRT and users will have no choice.