Entangle Protocol: Yield Optimizer for Liquid Staking Tokens
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Entangle Protocol: Yield Optimizer for Liquid Staking Tokens
In this article, researcher Viktor introduces the problems that Entangle Protocol can solve, the protocol's mechanism principles, products, use cases, and token economics.
Navigating Web3 tides with focused insightsAuthor: Viktor DeFi
Translation: TechFlow
Entangle Protocol, a yield optimizer for Liquid Staking Tokens (LSTs), increases users' LST yields by 1-3x. In this article, researcher Viktor introduces its problem-solving capabilities, protocol mechanics, products, use cases, and token economics.
Overview
To date, DeFi continues to function because liquidity drives trading. Indeed, it is liquidity that powers markets and fuels growth. However, DeFi still struggles with fragmented liquidity.
Liquidity is isolated and does not flow freely across protocols, negatively impacting both projects and users. This is precisely where Entangle comes in. Entangle aims to raise the standard for cross-chain liquidity provision and capital efficiency by serving as a liquidity-centric layer supporting both native and external applications. The platform addresses three persistent challenges in DeFi:
• Liquidity is isolated and fragmented;
• Protocols lack liquidity retention;
• Users suffer from low capital efficiency.
While many other protocols are also tackling similar issues, Entangle’s approach is unique.
Infrastructure
The platform addresses these problems through the Entangle Blockchain and its distributed oracle solution.
Built using the Cosmos SDK, the Entangle Blockchain enables seamless connectivity between EVM and non-EVM blockchains. It also facilitates oracle transactions.
Meanwhile, the Entangle Distributed Oracle Solution (EDOS) serves as the engine powering the platform's flagship cross-chain dApp, Synthetic Vaults. EDOS eliminates the security risks associated with third-party cross-chain bridges and oracle solutions, making Entangle more efficient and secure.
Synthetic Vaults
Now let’s turn to Entangle’s flagship native dApp—Synthetic Vaults—currently launched on Avalanche, Polygon, Ethereum, BNB Chain, Fantom, Optimism, Arbitrum, and MultiVersX. It enables optimal utilization of liquid staking asset positions (xLSD) across multiple chains.
Now let’s walk through an example to illustrate how yields are enhanced:
Pete provides liquidity on CurveFinance and receives LP tokens in return. He then stakes them on Entangle. Entangle automatically compounds those LP tokens on ConvexFinance to earn additional yield. Subsequently, Entangle issues Pete LSD-backed LP tokens, which can be used as collateral for loans or borrowing on other protocols. This strategy doubles—or sometimes even triples—Pete’s crypto yield, generating returns across multiple vectors.
In essence, as an LST yield optimizer, Entangle fits naturally into the LSD narrative. Users can unlock deeper layers of yield via Synthetic Vaults instead of relying solely on single-layer returns from their LSTs.
Incidentally, Entangle’s infrastructure isn’t just beneficial for users—it also unlocks innovative use cases for dApps and builders. It allows them to bootstrap protocols with sticky liquidity, deploy yield strategies, and build applications such as games and prediction markets using EDOS.
Tokenomics
$ENTGL is the primary utility token of the Entangle ecosystem, used for gas fees, operating Keeper oracles, validating transactions, and more. With a total supply of 1 billion tokens, a significant 45.6% is allocated to the community and infrastructure.
Revenue
Entangle generates real revenue for the protocol through:
• Auto-compounding of staked assets;
• Vault execution fees;
• Trading fees on Entangle’s internal DEX;
• Gas fees on the Entangle Blockchain;
• Fees from the Entangle Oracle Solution.
Partnerships
As previously mentioned, Entangle has partnered with eight major blockchains. Recently, it formed close collaborations with Sei Network and Curvance, with more partnerships on the horizon.
The project has already launched on testnet.
My Take
DeFi continues to evolve, and to grow and attract more users, we must promptly address pressing ecosystem needs. Cross-chain liquidity is one such critical solution. It’s vital because it acts as a double-edged sword—enabling users to maximize returns on their assets while helping protocols bootstrap liquidity faster.
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Viktor DeFi
