Rok Kopp (EtherFi): "We want to become a kind of bank".

The Big Whale: Your protocol has attracted a huge amount of capital, with a 30-fold increase in fixed asset value over the last two months. What explains this craze?

Rok Kopp: There are several factors behind this success, but there's no doubt that the restaking theme, on which we are positioned, has met with a significant response in the ecosystem. This new trend, driven by the EigenLayer project, is generating a huge amount of demand even though it is not yet operational, which is quite remarkable. It's been a long time since a protocol has managed to attract so much funding, with more than $11 billion from TVL. The second factor is of course the return of the bull market, which has been creating some excitement on the markets for several weeks.

Why is there so much interest in restaking?

Revenues from Ethereum staking are destined to decrease over time, as more and more players participate in securing it. This is a mathematical consequence. It was therefore necessary to find a way of increasing returns through innovative solutions, while at the same time having a positive impact on the ecosystem. This is what EigenLayer promises by offering to use Ethereum's security to secure other projects that need it. People who delegate their ethers (ETH) to EigenLayer will benefit from additional returns on top of those from traditional staking.

How does EtherFi fit into EigenLayer?

We immediately identified the need to offer liquidity to people wanting to stake their ethers in EigenLayer. EtherFi's eETH is a representation of the ETH deposited in the protocol, allowing people to interact with EigenLayer with no minimum amount and, above all, to continue to benefit from their capital, which is not possible if you go directly through EigenLayer. When we started out in February 2023, there were still no liquid restaking tokens, which represented a good opportunity since the first to arrive often benefits from a substantial advantage.

Can the attractiveness of restaking last over time?

I don't think that interest in restaking will wane if the promises are kept. However, at EtherFi, we don't intend to make restaking the core of our business. We want to become a kind of bank on Ethereum.

How does that work?

Traditional banking players, such as Morgan Stanley or BNP Paribas, offer three types of account: a deposit account, a savings account and a securities account. We're going to take inspiration from that, but based entirely on the blockchain.

Firstly, if you stake ethers on EtherFi, it acts as a savings account, as it will be funded by income from staking. Secondly, with "EtherFi Liquid", which we are introducing today, you will benefit from a service that could be likened to an investment account: our users will be able to deploy standardised investment strategies in decentralised finance (DeFi) protocols with just a few clicks. This will provide access to maximised rewards that are usually only available to professional or institutional investors.

Finally, we will shortly be launching "EtherFi Cash", which could be likened to a deposit account for making daily payments.

With this in mind, are you working on the release of a payment card?

Very likely. Our "EtherFi Cash" product is still in its infancy. The idea is really to turn it into a kind of current account.

Are you going to integrate stablecoins to make payments easier or remain in ethers?

For the time being, we will remain in ethers. However, several stablecoins native to decentralised finance, such as Ethena, could be of interest to us to offer more stability options. But in the first instance, we are targeting users wishing to take a long-term position on Ethereum.

A business like this inevitably raises a number of regulatory questions. Where is EtherFi based?

Today, the company and the majority of its employees are based in the Cayman Islands. For a project like ours, it's too uncertain to be regulated in the United States at the moment.

How many of your users are institutional?

We can estimate that around a third of the ethers deposited with us come from institutional investors or professionals in the crypto sector. Among them, a hedge fund has deposited several million dollars in EtherFi.

Are you in contact with any major traditional players?

Yes, we are in discussions with several major traditional funds. In the long term, we would like to be one of the players providing staking solutions for future Spot Ethereum ETFs. We think their approval including staking is inevitable.

You recently announced a $30 million fundraising round. Are you planning to recruit?

Our team currently consists of 8 people, but we'll be 14 very soon. We currently have offices in the Cayman Islands, South Korea and Denver, in the United States.

How will the EigenLayer validators, to whom you will delegate the EtherFi ethers, be chosen?

As we are in the very early stages, our team will select them initially. But once the ecosystem has matured, it will be the holders of our ETHFI governance token, launched today, who will make the choice.

When can the first restaking rewards be paid out?

No project yet benefits from the security of Ethereum via EigenLayer. EigenLayer has not yet launched its mainnet. The rewards will come when it does, which we expect to happen in the next three to six months.

EtherFi is often touted as the "Lido of restaking" because it was the first project to offer a liquid staking token. Is this a fair comparison?

Lido excelled in two areas. Firstly, they were able to maximise their competitive advantage by positioning themselves early on. Secondly, they have managed to integrate their liquid staking token (stETH) into numerous DeFi protocols, becoming a must-have asset in the sector. We want to do the same with our eETH.

Your governance token was originally due to be distributed as an airdrop in April. Why did you bring the timetable forward?

Essentially because there was a market opportunity. We saw enormous enthusiasm in the sector, which made it opportune to bring the launch forward. It will also allow us to start decentralising the protocol earlier than planned.

What will your ETHFI governance token be used for?

Our token will play a very important role in the governance of the protocol. It will also offer its holders the opportunity to accumulate more rewards from the protocol.

EtherFi is the first liquid restaking protocol, but you have competitors like Kelp and Renzo who have not yet launched their governance token. How do you intend to retain the liquidity of those who would like to go 'farmer' these protocols to obtain their airdrop?

We have identified this risk for a long time, which is why all ETHFI tokens will not be distributed at once. The airdrop will take place in two phases: the first today and the second later. But beyond this strategy, we are convinced that we offer the best product and the most ambitious long-term vision. It's certainly possible to take a casino approach, which is 90% of the industry, but we firmly believe that our project will have a positive impact on the industry.

To go further:

👉 Our report on the issues surrounding staking on Ethereum.

👉 Our analysis of EigenLayer, the major player in restaking.

👉 Our comparison of the main liquid staking players.

👉 Staking: why companies are getting into it.