Staking is one of the most popular types of investments in the crypto space. Traditional staking involves locking assets for a certain period of time in order to receive rewards and maintain blockchain technology. Despite its popularity in the crypto world, staking had a significant drawback - staked assets cannot be used during the lock-up period.
An evolved version of staking called liquid staking solved this problem. By investing in liquid staking, users receive additional tokens that can be used in the DeFi space to participate in various protocols and receive additional rewards, thereby bypassing blocking restrictions.
Interesting fact! Eigenlayer is a kind of monopolizer in the world of restaking. EigenLayer's TVL is $15,034b, which means the platform occupies more than 96% of the total market.
Restaking as a type of investment quickly gained popularity as it allowed investors to restake their assets after the initial staking. It not only allows users to contribute to the blockchain’s security, but also earn additional rewards.
Today's article from Notum will tell you about the Karak Network, which offers innovative restaking solutions in three networks. In addition, we will consider its advantages, disadvantages, operating principles and investment liquid staking and restaking strategies available on the platform at the moment.
Karak: the Essentials
- TVL: $544,29m
- Risk Level: Medium
- Blockchains: Ethereum, Arbitrum, Karak Network
- Foundation Date: 2023
Karak is a crypto platform and also the universal restaking layer. It is powered by the whole cryptocurrency economy across all the assets and chains.. It allows to provide security for any crypto asset and also offers developers design capabilities that will allow you to seamlessly create advanced infrastructure designs.
Interesting fact! The founder of Karak, Raouf Ben-Har, also co-founded Andalusia Labs.
The uniqueness of Karak lies in the fact that it gives protocols the ability to tap into secure trust networks from day one. The platform significantly lowers the barrier to securing new protocols and also eliminates the need for protocols to incentivize their own sets of validators. Thus, the process of bootstrapping becomes more accessible, accessible and scalable.
Source: Karak Website
Thus, Karak and its unique infrastructure offer unique opportunities for different users:
- Stakers. Users can be confident in the cryptoeconomic security of any asset while using Karak. Besides, stakers receive boosted rewards from any asset. In addition to the native utility of the cryptocurrency provided, they also receive income from network fees.
- Operators. With Karak, node operators can run validation software, thereby protecting even more networks with more assets. Thus, they will be able to provide minimal overhead and maximum capital efficiency.
- Developers. With Karak, the process of bootstrapping security becomes more accessible and scalable, since from day one the platform allows developers to tap into secure trust networks.
Karak: Operating Principles
Karak's design differs from other restaking protocols, as it allows users to repurpose their staked assets to extend Ethereum's security. This also applies to other trust networks' security to other applications. With the Karak network, stakers can transfer their assets to a Distributed Secure Service (DSS), as well as transfer additional rights to their staked assets.
«The opt-in feature creates additional slashing conditions to meet the conditions of secured services such as data availability protocols, bridges, or oracles» - Karak Docs.
Karak works as a marketplace allowing developers to stimulate validators to distribute their restaked assets to secure their secured services. Thus, using Karak, developments can make it attractive for validators to choose their projects using simple incentives. And since there will be no need to create a new trust network, financial and time costs will drop sharply.
Interesting fact! Restaking on Karak significantly facilitates improved bootstrapping and composability across networks.
Why Invest in Restaking with Karak?
At the moment Karak offers multiple different liquid staking and restaking options with a large number of rewards. In addition, Karak has the following advantages:
- Multi-asset restaking. A unique feature of Karak is a new primitive in cryptoeconomic security - multiasset restaking. It allows users to restake various tokens such as Ethereum, stablecoins, liquid staking tokens, and others to earn rewards.
- DSS. The platform allows restakers to provision assets to a Distributed Secure Service (DSS), preventing the failure of one asset from compromising the DSS. This level of flexibility has made DSS economically self-sustaining.
- Restaking anywhere. With Karak, developers can focus on building innovative products where users are, rather than where infrastructure is available. Moreover, with Karak's design, each network can have its own restaking infrastructure natively deployed and secured by its own assets.
- Safety. Karak network is secured by a global decentralized network of trust. It creates a universal marketplace where stakers and developers can innovate together. In addition, Karak passed two audits in April 2024, which indicates the proper level of protocol security.
- K2 bridge. Karak has its own bridge allowing users to deposit and withdraw crypto assets within Ethereum, Arbitrum, and Optimism networks.
Karak: Investment Strategies
Karak app offers users liquid staking and liquid restaking options, including stablecoins, Pendle, and even wrapped bitcoin restaking. Thus, by depositing assets on the Karak Network, investors can receive not only staking and restaking rewards but also Eigenlayer Points, LRT Points, and Karak XP.
- Liquid staking and restaking. With Karak, users can re-stake their assets by depositing their Liquid Staking Tokens (LSTs) or Liquid Restaking Tokens (LRTs) into the platform’s smart contracts. After this, validators can take LST or LRT that have already been staked in other protocols (for example Rocket Pool or Mantle) and restake them on Karak. Currently, the platform offers 9 liquid staking and 8 liquid restaking options.
- Stablecoins. Users can also invest their stablecoins into Karak smart contracts and restake them. Thus, validators on the platform take those stablecoins that have already been staked in other protocols (such as sDAI) and restake them on Karak. The platform currently offers 5 stablecoins. The main advantage of stablecoins for restaking is that since they are not volatile, the DSS creator can predict the economic security they can offer.
All options for liquid staking and restaking can be found here.
Karak: Risks and Disadvantages
Despite the unique design of the platform, which offers a large number of intonation possibilities, Karak is also subject to some risks that are important to be aware of before using it:
- Risks of smart contracts. Since Karak Network operates on smart contracts, any vulnerabilities and bugs in them can lead to partial or complete loss of assets.
- Profit fluctuations. Restaking rewards may vary depending on various factors such as project security, market conditions, changes in reward structure, and so on.
- Complexity of using the platform. Despite the fairly simple interface, it can be quite difficult for a beginner to understand the difference between liquid staking and restaking investment strategies, which can lead to the wrong choice and loss of funds.
Notum’s Verdict
Karak is a unique restaking protocol offering innovative solutions and opportunities for both stakers and developers. This universal restaking layer allows to provide security for any crypto asset, and invites developers to design and create advanced infrastructure designs. Karak ranks second in restaking TVL rankings with a total value locked of over $544.29 million.
The uniqueness of the platform lies in its innovative features such as multiasset restaking, allowing users to retake tokens to receive rewards. In addition, the platform has Distributed Secure Service (DSS) and even its own K2 bridge for depositing and withdrawing crypto assets within Ethereum, Arbitrum, and Optimism networks.
Despite the basic risks associated with the vulnerabilities of smart contracts, the platform has proven itself to be a unique tool with various liquid staking and restaking capabilities and a large number of rewards.
Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.