Lair Finance: Build a multilateral incentive coordination layer system to awaken LRT with real benefits

The rise and fall cycle of LRT: From the point boom to the profit cold

Since the second half of 2023, LRT (Liquid Restaking Token) has gradually become one of the hot narratives in the market. By re-private LSTs (current pledged assets) in the LRT protocol, users expect to obtain a new layer of protocol incentives in addition to the original pledge income.

Among them, ether.fi set a precedent with "non-commitment points", and improved user activity and fund precipitation through behavioral binding, driving the rapid growth of Restaking TVL. This mechanism adopts the integral model of "non-committed incentive + operational behavior binding" to build a future incentive path that is predictable but not directly redeemed for LST holders, which greatly improves user participation and fund precipitation without clarifying the issuance of coins.

As ether.fi 's model gained market verification, it quickly triggered a TVL battle across the entire Restaking track.

Several leading projects including EigenLayer, Renzo, Kelp DAO, Swell, Puffer, etc. have also launched their respective versions of the points system, thus establishing the mainstream position of "points-driven growth" in the LRT field. Even the DeFi protocol Pendle builds an infrastructure for early trading and pricing based on its zero-interest bond model.

In fact, after a brief round of fanaticism, the LRT market gradually entered a slowdown in growth as multiple projects completed TGE and distributed airdrops to point users last year. Data shows that since May and June 2024, the total supply of LRT tokens began to fall after hitting the $3.88M peak, and maintained an extremely limited slow growth level for the subsequent period, and market activity has also stabilized or even cooled.

The points feast ends, real benefits are the next stop

From the perspective of the crypto market, profit-seeking liquidity never sleeps. Therefore, the fundamental reason for the overall downturn in the current LRT market is that the real return level continues to decline, and the market lacks clear expectations for future returns.

The points model exposed three major structural problems after experiencing the initial dividend:

• Incentives are unsustainable: after TGE, after excitation fault, TVL declines, and APR decreases; **

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• Inadequate ecological stickiness: Most LRT assets lack multi-scenario use, and poor asset reusability; **

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• Imbalance of community participation: Big players dominate the list, small players cannot get airdrops, and "It is better to buy coins than mining" has become a consensus.

After the original logic of "as long as you participate, you can get additional airdrops", LRT users gradually realized that what is left is the basic income corresponding to mainstream LST, and the annualization is generally only in the 4-6% range, which greatly reduces the attractiveness.

More importantly, driven by high-profile narratives such as Meme, AI, and RWA, market funds and users have gradually turned to a track with more short-term returns. In a market environment with extremely liquidity sensitive, users and funds tend to "migrate profitably", go wherever they have high returns, and are increasingly reluctant to bind to a certain LRT protocol for a long time.

Therefore, after the TGE was fulfilled by multiple projects, the community generally experienced strong disappointment. Not only is the airdrop quota lower than expected, but the tokens performed poorly in the market, further resulting in a decline in users' willingness to participate in the entire LRT track. How to build an LRT mechanism that truly has "native income capabilities" and "long-term participation stickiness" has become a challenge that projects must face in the next stage.

In the current stage of the development of the LRT market, Lair Finance is taking a different approach. By building a multilateral incentive coordination layer , it no longer relies on pure points expectations or short-term airdrop stimulus, but is committed to introducing sustainable, verifiable real-earnings paths into the LRT market through a series of innovative mechanisms, injecting momentum into the LRT market to usher in a new round of growth.

Lair Finance's road to breaking the deadlock

The traditional LRT model can be understood as further repackaging based on LSD, that is, the "secondary structure" of LST assets. Although the mechanism design of different protocols is slightly different, the underlying paradigm is basically the same, and the core logic is basically built around the Ethereum ecosystem. In fact, more than 90% of the current LRT protocols are established based on the ETH and EigenLayer systems, resulting in their natural limitations in profit expansion and mechanism elasticity. The stereotyped asset path and a single on-chain scenario make the actual income obtained by users mainly rely on the native interest of LSD, making it difficult to form a compound incentive model.

In contrast, Lair Finance is not limited to the Ethereum ecosystem, but has built a cross-chain liquidity re-staking protocol that is adapted to multi-chain structures from the beginning, connecting multiple Layer1s, including Kaia, Berachain, Injective, Somnia, Story, Initia, etc.

Its core value lies in three aspects:

• Multi-chain adaptability: deployed on emerging high-potential public chains such as Kaia and Berachain; **

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• Multi-source income design: native pledge + re-pled + ecological incentive three-layer flywheel; **

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• Multilateral ecological connection: covers three behavioral scenarios: on-chain users, gamers, and Web2 users. **
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This design allows Lair to detach from the traditional "ETH-EigenLayer" path, flexibly design a native adaptability LRT framework, and build a sustainable, traceable composite incentive closed loop.

In the new liquidity pledge system, pledged assets can not only obtain basic returns, but also obtain additional incentives through multi-dimensional returns superposition and combined deployment with DeFi protocols. At the same time, participate in the verification security guarantee, and improve the native yield without sacrificing liquidity. More importantly, what Lair unlocks is a liquidity bridge between different Layer1 blockchains, thereby amplifying the security and economic synergy potential of each underlying blockchain and becoming a new infrastructure to promote the growth of multi-chain ecosystem.

Currently, Lair has been deployed on two emerging L1 networks, Kaia and Berachain:

• In Kaia Chain , Lair accounts for more than 66% of the staking market, and has connected more than 3.6 million KYC users through cooperation with 7 applications including Catizen, Avalon, LineNEXT of the LINE ecosystem , promoting the conversion of Web2 users to on-chain asset participants.

• In the Berachain chain , Lair has reached in-depth cooperation with the leading LSD protocol Infrared, integrating more than 95% of the LST liquidity market , and launching LrBGT through the AVS mechanism to realize the closed loop of multi-source income structure on Berachain.

In a word: Lair is not just re-staking, it is doing the infrastructure of "incentive coordination".

feature

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Traditional LRT

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Lair Finance

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Ecological coverage

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More than 90% are mainly based on ETH / EigenLayer system

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Kaia, Berachain, Injective, Story and other multi-chain

Asset path

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Single LST asset replenishment (based on ETH)

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Re-staking multi-chain LST assets and capturing compound incentives from tracks such as DeFi/GameFi

Motivation Model

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Basic LSD income + one-way points airdrop

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LSD Basic pledge income + real re-pled income + ecological incentive" three-layer flywheel

User coverage

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Pure link users

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On-chain stakers + 300 million LINE Web2 users

Help Kaia ecology form a community flywheel

Kaia is a new generation of high-performance Layer1 blockchain for the Asian market initiated by LINE NEXT, committed to achieving a seamless transition from Web2 users to the Web3 world. One of its core advantages is that it deeply integrates the Mini App system of the mainstream communication platform LINE, which significantly reduces the threshold for developers to build dApps or migrate traditional applications to the chain, and provides applications with a huge user base and a strong traffic portal, thus creating a Web3 application environment with high scalability and user-friendliness.

Relying on the LINE ecosystem, Kaia has more than 300 million potential user groups, and through Mini dApp, points system and preset identity mechanism, it has opened up the key path for users to cold start. Therefore, Kaia is regarded as one of the most promising infrastructures to enable large-scale user migration of Web3.

In terms of ecological structure, Kaia actually connects two distinct community groups:

• One category is crypto users represented by Web3 Aboriginals who interact with Kaia's network through staking and on-chain transactions;
• Another category is Web2 users from LINE Mini dApp, who mainly access on-chain activities through consumer-oriented light applications such as games, SocialFi, and Memes.

However, the difference in cognitive structure and behavioral patterns between the two leads to a lack of consensus link between $KAIA coin holders and actual DApp users, and it is difficult for Web2 users to deeply integrate into the community ecology, thus making Kaia not yet formed a complete community flywheel effect.

As Lair Finance's KIP-163 proposal based on Kaia (CnStakingV3) further expands its layout in the ecosystem and builds an LRT system, the long-standing problems of community faults and staking participation thresholds in Kaia's ecosystem are gradually improving.

For users who are not yet familiar with KIP-163, the proposal introduces a new generation of staking architecture for Kaia 's main network. The previous CnStakingV2 framework only supports users to pledge $KAIA tokens to limited nodes, resulting in uneven distribution of staking income, concentrated node power, and even potential security monopoly risks. The biggest innovation of CnStakingV3 is to support "public delegation", that is, any non-verifier user can freely entrust the KAIA they hold to trusted GC (Governance Committee members), thereby achieving a more decentralized and more balanced pledge ecosystem.

Lair Finance is the first staking service agreement built on the Kaia CnStakingV3 architecture. Users can delegate $KAIA to multiple GC nodes through their platform, and on this basis, further participate in the LRT system built by Lair to obtain multiple staking returns with richer structure and more compound returns. The entire process does not require custody, which not only ensures the security of assets, but also greatly improves the convenience of $KAIA holders in participating in ecological governance and obtaining profits. It is worth mentioning that Lair Finance currently accounts for 70% of TVL on the Kaia chain.

Hierarchical re-pled system drives multi-dimensional income flywheel

Lair Finance's liquidity pledge system has several parts:

• Lair Finance LSD Pool

Support $KAIA token holders to stake tokens to mint $stKAIA. Lair Finance will work with GCs with the best APR to pledge the $KAIA tokens pledged by these users to Kaia chain to obtain chain-native earning rewards, and allocate part of them to $KAIA token stakers and the other part to Liquidty Vault.

The income from the pledge pool will automatically accumulate without the need for user manual collection. After the user pledges $KAIA, he will receive the income token stKAIA, whose value will increase as the staking reward increases. For example, if a user pledged 1 $KAIA at an annual interest rate of 10%, the value of stKAIA it holds will increase to 1.1 $KAIA in one year.

• Re-staking pool

Users holding $stKAIA (or other LST tokens on Kaia such as $sKLAY, $gcKLAY, or $stKLAY, etc.) can co-pol these LST assets with equivalent $LAIR tokens (Lair Finance protocol tokens) to the Lair Finance re-staking pool to generate $rstKAIA tokens. The token holders will further enjoy the annualized returns of the $LAIR token. In turn, this also in disguise enhances the need and practicality of the $LAIR token.

• Liquidity Vaults

This incentive pool is aimed at two types of user groups: Web3 stakers and Web2 LINE users. Its structure includes game reward pools and multiple Active Vault Services (AVS Vaults).

AVS is a unique mechanism of Lair Finance that allows users to deposit re-staking assets such as $rstKAIA into specific Vaults. Users can earn points and rewards by completing on-chain behaviors such as participating in a specified GameFi game, holding a specific NFT, or completing interactive tasks. These vaults are usually initiated by the Kaia Eco-project (the first issue is mainly game developers on LINE) and are reviewed by Lair DAO.

As mentioned earlier, Lair's LSD pool injects part of the pledge rewards into the game reward pool under Liquidity Vaults. When LINE game users participate in the game, they will receive a Receipt Token (Receipt Token), which can be used to redeem $stKAIA rewards in Vault.

In fact, the AVS mechanism is integrating "staking" with "interaction" and is leveraging new logic for value capture of on-chain behavior. Driven by this mechanism, the early explosion of GameFi may be repeated in Lair's AVS model.

At the same time, users holding $rstKAIA can further pledge them to AVS Vaults, which contain tokens from LINE games (such as Game Tokens, points, etc.) to incentivize pledged users.

It is worth mentioning that Lair Finance has successfully completed its first round of AVS activities recently. The first round of AVS cooperation projects include:

• Elderglade (Binance IDO, Bybit Megadrop, online)

• Bombie (linked with Cattea, TGE is approaching)

• Frog Defense (BingX is online)

• As well as Slime Miner, Captain Tsubasa -RIVALS, Heroic Arena, etc.

The first round of AVS cooperation project TGE has a high starting point and high community attention, which has laid expectations for the upcoming second round and has once again verified the strong potential and project screening capabilities of Kaia Ecology and Lair cooperation matrix .

In fact, this re-staking system is gradually promoting a positive value cycle between $KAIA coin holders, gamers, and game developers/project parties, and jointly promoting the growth and endogenous driving of the Kaia ecosystem.

For $KAIA coin holders, a clear and measurable triple income path can be obtained through this staking system:

• Staking $KAIA to Lair allows you to obtain $stKAIA while enjoying native pledge income from Kaia PoS (Proof of Stake) consensus mechanism
• Users can re-private $stKAIA and $LAIR and mint $rsstKAIA, thereby further obtaining Lair platform token incentives
• $rstKAIA can be further pledged to AVS Vault to obtain tokens, points and airdrop feedback from partner game projects

Under this series of incentive mechanisms, $KAIA holders not only become long-term participants and ecological loyal users of LST, but also essentially transform into co-constructors and beneficiaries of Kaia’s game economic growth.

For gamers, the incentive mechanism drives them to remain active frequently in LINE mini dApp games. By completing the game tasks to obtain Receipt Token, players can exchange $stKAIA in Lair's liquidity vault, further participate in the asset utilization of on-chain pledges or ecological DApps, realize the natural transition and deep integration from Web2 to Web3, and gradually accumulate into on-chain users.

For game developers/projects, after obtaining Lair DAO review and successfully establishing AVS Vault, project tokens can be distributed to $rstKAIA users in a directional manner, completing early user boot and cold start. At the same time, players enter the on-chain ecosystem after obtaining $stKAIA in the game, which not only enhances user stickiness, but also helps the game obtain real on-chain behavior data and potential governance participants, thereby building a sustainable community foundation.

With the continuous operation of this value system, Lair is using the "re-staking + incentive coordination layer" model to create an ecological flywheel for Kaia that is driven by the resonance of the stakinger, player and developer, becoming the core engine of on-chain application growth and capital cycle.

From PoL to LrBGT, unleash the real power of Berachain

Following Kaia, Berachain became the second Layer1 network deployed by Lair Finance.

Compared with other chains, Berachain's biggest feature is its consensus mechanism with liquidity as the core - PoL (Proof of Liquidity), which essentially transforms "liquidity providers" into block producers and builds an incentive model that deeply binds network security and ecological activity.

In the PoL framework, the role of ordinary coin holders is also redefined. Unlike traditional PoS models that stake tokens to validation nodes, users on Berachain delegate $BERA to a PoL pool they trust. These pools are operated by the ecological project party and need to be approved by the Berachain governance mechanism before they can be added to the incentive system.

This means that coin holders are actually supporting a specific "liquidity strategy" rather than simply participating in network consensus security.

These PoL pools usually use the received assets for liquidity construction of key trading pairs in DEX, thereby enhancing the transaction depth and market efficiency of on-chain assets. In return, the pool operator will obtain the ecological token $BGT issued by Berachain based on its liquidity contribution scale and activity, and can distribute part of the profits to liquidity participants through the incentive mechanism set by the agreement. To a certain extent, PoL transformed "security mining" into "ecological construction mining", forming a positive growth closed loop with incentive alignment as the core, and promoting the active development of the Berachain application layer.

At present, the PoL Vault LAIR/BERA mining pool deployed by Lair Finance on Berachain has been approved for online launch on Kodiak. Currently, users provide liquidity for the pool. While obtaining native LP income and LAIR token income, they can further obtain $BGT token income.

At the same time, the WBERA/LAIR pool deployed by Lair Finance on Infrared Finance is also newly launched. While users participate in LP and get basic returns, they will also receive iBGT (BGT LST tokens on Infrared Finance).

Of course, in addition to deploying PoL Vault, Lair Finance has further brought Berachain a brand new LRT system, bringing multiple returns to BGT token holders, and continuing the continuity of the POL mechanism 's returns.

Currently, Lair Finance has introduced its liquidity re-staked token on Berachain, which is a Liquid Restaking Token (LRT) built on Berachain's native asset $BGT. This mechanism integrates the liquid staking token iBGT issued by Infrared Finance and builds a financial derivative asset with automatic compounding and composability based on it. Users can mint and obtain LrBGT tokens by simply depositing their iBGT into Lair's re-staking contract, without additional pledging of $LAIR or other assets throughout the process.

The core advantage of LrBGT lies in its compound income structure compatible with asset liquidity. While holding LrBGT, users will automatically obtain the following two types of benefits:

• Basic staking reward: From the validator node block reward generated by $BGT staking behind iBGT. This part of the income is provided by Infrared and automatically compounded through the Lair mechanism without actively collecting it.

• PoL Eco-Incentives: Because LrBGT is part of the contribution assets in the PoL model, users can also receive $BGT incentives from the Berachain network, which may also include additional incentives provided by Lair or other partnership agreements (such as $LAIR).

At present, although LrBGT does not support staking again, we see that LrBGT's secondary staking will be launched on Lair Finance. Recalling the way to obtain game token incentives for secondary staking on Kaia, perhaps after the user performs LrBGT's secondary staking, it is expected to further obtain token airdrop rewards for other projects on Berachain, etc.

In fact, the significance of Lair's construction of LRT for $BGT is not only to improve the efficiency of holders, but also to unlock the capital potential of the PoL mechanism and Berachain ecosystem.

As the core of the governance and incentives of the network, $BGT has long been facing the short-term behavioral model of "mining-extraction-selling". Users lack loyalty to hold coins and willingness to participate in governance, resulting in the decreasing effectiveness of token incentives and insufficient community stickiness.

At the same time, the current Berachain DeFi system has limited support for $BGT's capital efficiency, and most pledged assets are in a closed state, making it difficult to participate in scenarios such as lending, trading, and portfolio returns, which inhibits its DeFi activity and system composability, and also weakens the actual incentive effect of $BGT under the PoL model.

The introduction of LRT is a structural response to the above dilemma.

By “liquidizing” the pledged assets in the form of LrBGT, $BGT is re-empowered to participate in the ecosystem. While users continue to obtain basic pledge income, they can also hold LrBGT to enter various DeFi paths such as liquidity mining, lending and re-pled, significantly improving the efficiency of capital use and the space for the combination of returns.

At the network level, LRT lowers the user's pledge threshold and enables more BGT holders to switch from "waiting and watching" to "participating", which not only helps to improve staking coverage and network security, but also further promotes a virtuous cycle of on-chain governance and incentive structure.

Further, as a structurally derived asset, LrBGT has the ability to participate in more protocol components as a "second-order asset" in the PoL model, becoming a composable capital unit in the Berachain DeFi system. This not only provides new financial building blocks for protocol developers, but also brings users a more flexible compound income strategy, further expanding the application radius and value anchoring capabilities of $BGT.

From a more macro-ecological perspective, the implementation of LRT has gradually formed a growth flywheel around $BGT.

Although Lair adopts a slightly different structure on Berachain than on Kaia, as the platform TVL continues to expand, a stable connection has been established between LrBGT and the iBGT provided by Infrared, which jointly amplifies the liquidity influence of core pledged assets. As the re-staking mechanism continues to gain user recognition within the PoL framework, BGT's staking participation and ecological stickiness have been simultaneously enhanced, and more capital has also flowed into the incentive structure built by Lair.

At the same time, LrBGT's penetration in various application scenarios of Berachain has also accelerated the market's functional awareness and value recognition of $LAIR, and gradually solidified its role as an incentive center.

In the positive closed loop of "staking assets → LRT derivatives → protocol participation → incentive distribution → token value growth", $BGT's DeFi activity is re-invigorated, and $LAIR realizes cross-system value collaboration in the multi-chain ecosystem, consolidating the core positioning of its connected protocol assets.

It is worth mentioning that through deep binding with Infrared, Lair Finance currently accounts for 95% of Berachain's LST market and is implementing a brand new liquidity sharing.

Conclusion

The Lair Finance protocol is transforming pledge behavior from closed to a composable and sustainable compound income system through the three-layer path of "PoS native pledge to LRT-derived assets and then to DeFi/GameFi incentives", forming a structured positive cycle.

In the Kaia ecosystem , Lair opens up the incentive mechanism between stakers, players and developers, and binds LINE player behavior with re-staking income through the AVS points model, truly realizing the connection between Web2 users and the LRT model for the first time. In the first round of AVS activities, the total pledge scale of rsstKAIA reached 74 million, and TVL accounted for as high as 70% of the entire network, which shows the ecological penetration.

In the Berachain ecosystem , Lair has built a dual income path based on the PoL mechanism. Users can obtain double reinterests for node rewards and PoL incentives through the structure of iBGT → LrBGT, and participate in mining pools such as LAIR/BERA and WBERA/LAIR. Currently, it has occupied about 95% of the LST market share on Berachain.

As the path closed loop of "staking → derivative assets → multi-scenario participation → value return" gradually matures, Lair Finance is injecting truly verifiable native income capabilities into the LRT architecture.

Lair Finance is building a new path: not only has Lido-style liquidity entry capabilities, but also integrates EigenLayer's security consensus mechanism and LayerZero's cross-chain scheduling capabilities. Its goal is to become a true "multi-chain unified incentive layer". It not only covers real user behavior, but also has cross-ecological incentive scheduling and asset distribution capabilities, and has all the characteristics of becoming the "next generation cross-chain Restaking center".

Currently, mainstream LRT projects such as ether.fi ($ETHFI) and Renzo ($REZ) have reached FDV of more than US$2.5 billion and more than US$1 billion respectively, even if they have not yet completed the commercial closed loop. In contrast, Lair has actually implemented a multi-layer income structure on Kaia and Berachain, and has built a traceable real incentive path based on diverse application scenarios such as GameFi and DeFi. The overall situation is still in an early valuation depression and has huge potential.

Lair is more like the prototype of "infrastructure-level LRT": through on-chain behavior driving, cross-chain income collaboration and multilateral ecological linkage, a systematic closed loop is built. For the market looking for the "LRT Second Spring", Lair may be not only an underrated project, but also an underrated paradigm.

The next round of incentive distribution is already on the way, and the real story of re-pled infrastructure has just begun.