How Everclear’s Chain Abstraction Scaled the Largest Restaking App, Resulting in $1B+ TVL Growth
In 2023, Everclear introduced the concept of Chain Abstraction, a significant shift in the dApp user experience that minimizes the need for users to care about what chain they're on. Chain Abstraction enables builders to make their application accessible to any user on any chain, without the need to bridge or interact with the underlying infrastructure.
In partnership with Renzo Protocol, Everclear created the L2 restaking category, bringing native restaking to six L2s, resulting in over $1B in additional TVL, a 10x increase in unique EOAs, and >90% reduction in gas fees for Renzo in the first 3 months alone.
Today, Renzo remains the largest chain-abstracted application on the market, demonstrating the power of meeting your users where they are, regardless of the chain they’re on.
Background
Chain Abstraction
Currently, interacting with dApps across chains is time-consuming and complex, even for seasoned crypto veterans. Tasks like bridging funds, managing gas fees, and switching networks add unnecessary friction.
Chain Abstraction enhances the dApp user experience by eliminating the need for users to worry about which chain they’re on. It simplifies crosschain interactions, enhances scalability, and offers a seamless experience in a fragmented ecosystem with 250+ chains and growing. Chain Abstraction addresses these challenges by allowing dApps to execute logic from any chain. Users can interact seamlessly without switching networks, signing transactions on different chains, or managing gas fees. This powerful design pattern ensures users can interact with dApps from any supported chain using any token, all within a single UI.
Restake From Anywhere (L2 Restaking)
EigenLayer's restaking model is designed to secure Actively Validated Services (AVSs), which in turn support and service L2s using Data Availablity, Shared Sequencing, bridges, watchtowers, etc. Yet, traditional restaking ironically undermined L2 ecosystems and introduced several challenges:
- High Mainnet gas fees made restaking less accessible to smaller players.
- TVL was drained from L2s as users moved funds back to Mainnet for restaking.
- The more successful AVSs became, the more attractive Mainnet restaking yields appeared, further incentivizing TVL to move away from L2s.
- This practice contradicted Ethereum's goal of migrating activity to L2s.
Everclear introduced Restake From Anywhere to address these issues, allowing users to restake ETH directly from their L2 of choice. This solution kept TVL within L2 ecosystems, significantly improved the user experience by eliminating the need for complex bridging, and avoided the high costs associated with Mainnet restaking.
Renzo Protocol
Renzo Protocol, the second-largest liquid restaking service in the market, allows users to restake their ETH to secure AVSs on EigenLayer, offering higher returns than traditional ETH staking.
L2 Restaking Powered by Chain Abstraction
Through Chain Abstraction, Everclear developed a native L2 restaking feature, allowing Renzo users to seamlessly restake on any of the six supported L2s (Arbitrum, BNB Chain, Base, Mode, Blast, and Linea) while maintaining an identical user experience across chains.
L2 Restaking UX on Renzo powered by Everclear's Chain Abstraction.
Impact and Results
Within a month of launching L2 restaking on Arbitrum and Mode, Renzo’s EOAs on these networks surpassed those on Ethereum.
Four months later, Renzo’s user base continued to skyrocket:
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TVL Growth
Before Chain Abstraction, Renzo's TVL was ~$614M as of February 28, 2024. On-chain data shows Renzo's TVL experienced a significant increase, peaking with over $1B in additional TVL on May 28, 2024, merely 3 months post-integration.
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Number of EOAs
Traditional restaking on Ethereum came with high gas fees, making it profitable only for large players and undermining DeFi's ultimate goal of providing financial access to everyone, regardless of wealth and status.
With Chain Abstraction, Renzo democratized access to restaking—lower gas fees on L2s allowed all users to restake affordably. With the barriers to entry dramatically reduced, Renzo experienced a significant uptick in the number of EOAs across multiple chains.
Key Factors Contributing to Renzo’s Growth
Crosschain Opportunities with xERC20
By harnessing the xERC20 token standard’s capabilities, Renzo users accessed numerous opportunities with ezETH across supported chains. Thanks to zero slippage during crosschain transfers, they could tap into high yields in L2 defi protocols with just one click, ensuring there was no opportunity cost.
With ezETH maintaining consistent value across chains and minimal transfer costs, it effectively became a unit of transport. This seamless value transfer enhanced the overall utility and appeal of ezETH, contributing to Renzo’s growth by making restaking more efficient.
Near-Zero Gas Fees on L2s
Users benefited from significantly lower gas fees, making L2 restaking more accessible and profitable.
One-Click Restaking
Everclear streamlined the complex process of bridging funds to Mainnet, allowing users to restake ETH without leaving Renzo’s UI to interact with bridges.
Expanded DeFi Integration
Collaborations with other dApps, lending protocols, and projects beyond Ethereum Mainnet expanded Renzo’s reach and created new DeFi opportunities.
Co-Marketing with L2s
Recognizing the value of Chain Abstraction in retaining TVL, various L2 networks actively promoted L2 restaking with Renzo and Everclear.
How L2 Restaking Works
Despite its simplicity for users, here's how Chain Abstraction powers L2 restaking behind the scenes for Renzo:
- Users directly restake native ETH from their preferred L2 on Renzo, earning them restaking rewards.
- Upon restaking, the smart contract mints Renzo’s LRT (ezETH) and delivers it instantly to the user, who can then engage in various DeFi activities within the same L2 ecosystem.
- The minting of ezETH is enabled by xERC20's capability to support multiple minters, including bridges and, in this case, Renzo as the issuing authority. This feature allows ezETH to move across chains without slippage, maintaining its value consistently.
- At this stage, the user journey is complete. All transactions are executed directly on the L2, taking advantage of lower fees and faster transaction speeds.
- In the background, ETH is batched and bridged to the Ethereum mainnet, where it is restaked. Everclear's trust-minimized infrastructure automates this process, ensuring cost efficiency, high security, and elimination of Mainnet user fees.
From the user’s perspective, restaking on an L2 is a single-click operation. There is no need to manage bridges or interact with multiple chains—Everclear manages all the complexities in the background.
Addressing Challenges with Chain Abstraction with the Clearing Layer
While Chain Abstraction enabled Renzo to expand and attract a broader user base across multiple L2s, it also presented significant challenges that limited further growth. These challenges were key in developing the Clearing Layer, allowing Renzo and other dApps to scale more effectively.
What’s the Clearing Layer
Everclear, the first Clearing Layer, is designed to manage the global netting and settlement of liquidity between chains. By coordinating market participants and integrating various settlement mechanisms, it reduces the cost and complexity of liquidity rebalancing. This approach enables seamless liquidity management and permissionless chain expansion, greatly improving the efficiency of the Ethereum ecosystem.
Netting Solves Rebalancing Issues
The Connext Bridge facilitates the bridging of ETH from L2s to Mainnet on Renzo using intents. However, as demand and transaction volumes grew, significant rebalancing challenges emerged for Everclear solvers. Maintaining the necessary asset ratios in AMM pools became increasingly complex and costly due to the high volume and frequent manual bridging required from Ethereum (where funds are settled) back to the L2 (source chain).
In today’s crosschain ecosystem, over 80% of transactions could be netted over a 24-hour period. By netting these transactions, the Clearing Layer can reduce settlement and rebalancing costs for solvers by up to 10x, providing several benefits:
- Better Pricing: Solvers can offer more competitive prices while remaining profitable.
- Chain Expansion: With reduced rebalancing requirements, solvers can handle more intents and support additional chains, allowing Renzo to scale further.
- Enhanced UX: Users enjoy lower gas fees and faster transactions thanks to the improved solver efficiency.
Permissionless Chain Expansion
Expanding to multiple chains requires substantial engineering work, liquidity, and time, limiting the pace of Renzo’s growth.
The Clearing Layer addresses these constraints by enabling dApps like Renzo to expand to any chain from day one, without the usual technical and resource challenges. Built as an Arbitrum Orbit rollup (via Gelato RaaS), the Clearing Layer uses transport protocols like Hyperlane and security marketplaces like Eigenlayer, providing the essential infrastructure to seamlessly scale dApps across thousands of chains.
Permissionless Liquidity
The requirement for ETH liquidity on each L2 supported by Everclear restricted maximum deposits and impacted pricing. Managing sufficient liquidity across multiple L2s was challenging, particularly in balancing user demand with operational efficiency.
As an open system, the Clearing Layer allows anyone to participate, improving their cost basis for liquidity rebalancing. This collective participation leads to higher rebalancing volumes, increased netting, and lower rebalancing costs for all participants.
Build Scalable Chain-Abstracted Apps with Everclear
The success of Renzo Protocol underscores the power of Chain Abstraction in building scalable, efficient dApps with seamless user experiences that drive unparalleled growth. With the Clearing Layer soon going live on mainnet, Everclear is positioned to help scale dApps by fully leveraging Chain Abstraction's benefits.
About Everclear
Everclear coordinates the global settlement of liquidity between chains, solving fragmentation for modular blockchains. As the first Clearing Layer, Everclear is the foundation of the Chain Abstraction stack, powering optimal liquidity for intent protocols and solvers.
