Tenet, a restaking blockchain: How to bring liquidity and yield opportunities to LSD?
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Tenet, a restaking blockchain: How to bring liquidity and yield opportunities to LSD?
Tenet is still in the testnet and beta phase, leaving ample room for growth.
Navigating Web3 tides with focused insightsAuthor: Jiraiya
Compiled by: TechFlow
Tenet is an EVM-compatible blockchain built using the Cosmos SDK. It aims to enhance chain security by leveraging a diversified PoS mechanism that accepts LSDs as validator collateral, while also bringing liquidity and yield opportunities to LSDs. In this article, crypto researcher Jiraiya provides a comprehensive analysis of Tenet from multiple perspectives.
DiPoS
Diversified Proof-of-Stake (DiPoS) enables network consensus through validators who stake a basket of assets. This prevents dominance by a single large entity controlling one asset, significantly reducing the risk of network attacks. The current staking list includes ETH, ATOM, BNB, MATIC, ADA, DOT, and TENET.
tLSD
Active staking providers on Tenet can also issue tLSD (Tenet LSD), which represents any LSD staked with these network validators. tLSD offers yield from staking while simultaneously participating in Tenet validation and earning network transaction fees.
Tenet also has its own LSD infrastructure, meaning you can liquid-stake assets like $ETH, $ATOM, and $BNB through their liquid staking protocol.
Since Tenet brings these assets onto their blockchain for security rather than monetary purposes, converting these LSDs incurs zero fees. They view this as a form of security incentive.
TENET/veTENET
Next, let's discuss $TENET. $TENET serves as the gas token for the Tenet blockchain. $TENET can also be staked with validators to help secure the blockchain. In return, stakers receive $LSD, known as $tTENET.
To earn validator rewards for securing the chain, $tTENET must itself be staked with corresponding staking providers. Alternatively, you can lock $tTENET into $veTENET to gain various benefits such as voting rights in governance and reward gauges.
For veTENET holders, there are multiple potential revenue streams, including 100% of withdrawal fees from validators, 50% of transaction fees, 100% of minting and redemption fees from the Tenet stablecoin, 100% of borrowing fees generated by borrowers in the Tenet Money market, and 100% of management fees from its DEX.
veTENET features reward gauges, which also open up possibilities for on-chain bribe mechanisms.
Native Stablecoin
Tenet also has its own stablecoin protocol. It adopts the Liquity model, allowing users to mint a decentralized dollar-pegged stablecoin (LSDC). These interest-free loans (denominated in LSDC) are collateralized by yield-generating assets such as $ankrBNB, $wstETH, and $cbETH.
What are the benefits of the Tenet stablecoin protocol? As a borrower, you can obtain interest-free loans in LSDC (Liquid Staking Dollar) while still earning yield on your underlying collateral. Being able to unlock liquidity from your yield-bearing assets is highly valuable.
Additionally, LSDC can be redeemed at face value for the underlying collateral at any time, providing users with flexibility and liquidity. Users can also earn additional yield by depositing LSDC into stablecoin pools.
Loan positions are called CLIPs—Collateralized Liquid Interest Positions. A CLIP has two balances: one representing your collateral position, and the other your LSDC debt position.
Since CLIPs are backed by LSDs, your loan can effectively pay itself off while your collateral continues to generate yield.
Tenet is currently still in testnet and beta stages, with significant room for growth. It’s like an Eigenlayer for many different assets, and this project could mark the beginning of restaking becoming increasingly popular.
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