Dialogue Unamano Initiator: Why create "EigenLayer" in the Asia-Pacific region?

Interview: flowie, ChainCatcher

Guest: Darryl, Founder of Unamano Project

With the upcoming Shanghai upgrade, the LSD track is one of the most competitive tracks in the first half of this year. Following the lead of staking service providers like Lido, SSV, and Rocket Pool, there has also been a rapid rise of nested protocols like Frax Finance in the LSD+DeFi space. LSD protocols not only need to provide liquidity but also offer high staking yields to users.

However, in the pursuit of high yields, many users have gradually deviated from the original intention of stable yield staking, leading to many high-leverage and high-risk behaviors. Darryl, the founder of the Unamano project, believes that "when one of the nodes has a problem, it may trigger a series of explosions, and users need to pay attention to risk control while pursuing returns."

At the same time, although the Shanghai upgrade has led to a brief recovery in the crypto market, Darryl believes that without new technological innovations, the market will remain in a bear phase for a considerable time. Users' investment behaviors will be conservative, and at this time, some yield models that guarantee principal safety will have certain advantages.

Therefore, the first phase of Unamano, established in 2022, will focus on principal-safe staking to help users maximize their returns. Unamano has set up two yield pools: the first is a stable yield staking pool similar to Lido, helping users to obtain stable returns; the second is a donation pool, where Unamano has introduced well-known projects like dYdX, APE Coin, and Nabox to the platform. Staking users can use the returns obtained from the stable staking yield pool to exchange for more potential project tokens to gain greater returns, with the APR (annual percentage rate) provided by the donation pool projects reaching 600%-50386%.

For project parties, launching on Unamano can provide support in terms of funding and community resources. Unamano's original intention is also to help some quality projects in the Ethereum community receive good development support.

After completing the first phase, the focus of Unamano's second phase will be to launch a re-staking plan to help early-stage projects on the platform address trust layer security issues at a lower cost. Unamano aims to become the "EigenLayer" of the Asia-Pacific region.

In addition to Unamano's differentiated positioning, ChainCatcher recently interviewed Darryl, the founder of Unamano, who shared trends worth noting in the LSD track before and after the Shanghai upgrade, as well as the innovations and risks behind the recently popular re-staking narrative.

1. ChainCatcher: Can you briefly introduce how you got involved in Web3 and why you chose to focus on the staking track?

Darryl: I entered Web3 around 2016, initially as a product partner for the public chain project NULS, which has been listed on major exchanges like Huobi and OKX. Later, I also participated in startups related to exchanges and wallet projects.

Why did I choose to work on the LSD track this time? By coincidence, NULS also uses a POS mechanism. We previously worked on a project called POCM on NULS, which is quite similar to what we are doing with Unamano now; it also generates returns through staking to donate to project parties in exchange for project tokens, and it performed quite well, with the two recently launched projects having several million dollars in staking.

However, NULS is relatively small compared to Ethereum, so when we learned that Ethereum was transitioning to a POS mechanism, we began planning how to transfer this model to Ethereum. The Ethereum community also needs a public service incubation platform that can provide opportunities for early-stage projects.

Additionally, the LSD track will definitely experience a major reshuffle with Ethereum's transition to POS and the recent Shanghai upgrade, which is also our opportunity.

2. ChainCatcher: What is the background of the core team of Unamano? What was the original intention of establishing Unamano?

Darryl: Many members of the Unamano team are early participants in the Ethereum community, having participated in early crowdfunding and important decision-making votes in the Ethereum community.

The Unamano members initially discovered that many digital public goods are dedicated to the long-term development of the Ethereum community but currently lack clear profit motives, making it difficult for these products to secure survival funding. Therefore, they wanted to propose a safe and risk-free way to fund the development of these ecological projects within the community.

The transition of Ethereum to POS provided an opportunity; under the POS mechanism, community users can generate interest by staking their ETH, thus providing these projects with a stable source of income. The team members spontaneously established Unamano (Spanish: echar una mano a alguien, meaning to lend a hand to someone in need).

Unamano hopes to enable builders in the Ethereum community to establish their own DAOs through the Project DAO on Unamano, allowing community members holding ETH to stake through the Project DAO to generate POS returns to support the early construction and innovative development of these projects.

3. ChainCatcher: What differentiates Unamano from mainstream staking protocols on the market? Why establish two types of staking pools?

Darryl: First, let’s talk about these two staking pools. The first is the stable yield staking pool, which can be understood similarly to Lido; users come in to stake, and we provide the capacity to supply 32 ETH, helping users generate returns.

The second pool is the donation pool (Project DAO), which focuses on how to improve the yield. The Project DAO is a public infrastructure driven by DAOs for Web3 builders. This protocol is based on "block rewards" to establish a decentralized, free, and DAO-driven Ethereum staking standard, as well as a financing model for the ecosystem, allowing users to freely participate in staking while also contributing to the development of ecological public goods.

From a business perspective, the protocol itself is divided into three parts:

(1) Create project party DAO pools and inject early tokens.

(2) Users generate block rewards by staking ETH.

(3) Users choose to receive ETH as a reward or opt to donate funds to ecological builders.

This system is based on a modular design, and in the future, it will integrate more staking-based applications. For example, the team is considering introducing staking to mint NFTs, making NFTs a "risk-free" asset and providing early support for NFT-related entrepreneurs.

This is what we aim to accomplish in our first phase. And in the second phase, we will focus on re-staking. We come from a technical team background and are optimistic about re-staking.

4. ChainCatcher: Recently, the re-staking protocol EigenLayer on Ethereum released a white paper, attracting attention to the re-staking narrative. What innovations does re-staking bring, and what are the risks? What is Unamano's positioning?

Darryl: The re-staking that EigenLayer is currently doing is actually very similar to the original intention of Ethereum; it modularizes the entire product to solve trust layer issues. The biggest highlight is that it can ensure the security of nodes through Ethereum, essentially borrowing existing Ethereum nodes to guarantee the verification of the security layer without requiring each project to build its own nodes.

Currently, most projects, such as oracles, Layer 2, sidechains, etc., are essentially reinventing the wheel. Project parties need to establish their own interfaces, which not only wastes resources but also requires significant funding and user support.

Of course, EigenLayer's re-staking model also has some risks: the selection of project parties is relatively narrow. Some project parties may trigger Ethereum's penalty mechanism due to certain risks, resulting in losses in node earnings, so EigenLayer will choose safer and more stable projects.

Re-staking aligns well with what we are doing because early-stage projects on the platform need to use trust layer protocols, and building their own nodes is a time-consuming and labor-intensive task for them.

In addition, we and EigenLayer will have different market positions. EigenLayer's customer base may lean more towards well-known projects in the European and American markets. Unamano aims to establish itself in the Asia-Pacific region, becoming the "EigenLayer" of the Asia-Pacific region, providing services for some longer-tail early and growth-stage projects.

5. ChainCatcher: Currently, there are several well-known project staking pools on the Unamano platform, such as dYdX. Are these staking yields provided by the project parties or your team? Why can the yields be as high as 500% or even higher? What potential risks are associated with staking?

Darryl: Some are provided by the project parties, such as dYdX and Nabox, while others are early activities launched by our team.

The early yields are indeed relatively high. The underlying model is that each block in the project staking pool generates multiple project tokens. If there aren't many participants staking in the early pool, even if a user stakes just 0.01 ETH, they can still share in the token rewards from the pool.

As more stakers join later, the yield will decrease, but there is no risk of principal loss. Essentially, it is a process of exchanging Ethereum returns for project tokens, focusing on risk-free staking mining. Aside from the potential decline in yield as more staking occurs, the biggest risk may be project failure, leading to losses in Ethereum staking returns.

6. ChainCatcher: Unamano recently launched an open plan, offering 32 ETH to attract more projects to set up staking pools on the platform. Aside from incentives, what benefits can these projects gain from Unamano's staking pools? Or what value can these staking pools bring to them?

Darryl: Our original intention is to help some good projects in the Ethereum community receive good development support. Initially, there are some funding incentives, and later we will help project parties solve some issues in project operations, similar to Gitcoin.

For projects, there are two main attractions. First is financial support. Our platform community currently has around 50,000 users, mainly overseas community users. Project parties can attract users to stake by engaging with our community, in exchange for future Ethereum returns.

Second is community traffic support. When users participate in a project's donations, they are recognizing the project, and the entire staking process is strongly tied to the project party, making them proactive early seed users for the project.

We hope to reach a TVL of 300,000 ETH this year and aim to introduce over 50 excellent ETH community projects. We are a decentralized platform, and project parties can apply to launch on our platform without any specific standards.

7. ChainCatcher: Can you disclose the current TVL and user count on the Unamano platform? What are your medium-term goals?

Darryl: Currently, Unamano is still in the beta testing phase, and the staking limit for each project is set relatively low. After we complete the audit, we will release the official beta version. Currently, there are about 200 addresses that have interacted with the mainnet, with a maximum TVL of over fifty ETH.

The app is also being updated. In the first phase, we will launch liquidity mining pools, go live with Uniswap, and after recent financing, we will primarily allocate funds to Uniswap for liquidity; in the second phase, we will launch product staking pools; and in the third phase, we may introduce project farms, bringing in some DeFi products to allow users who earn project token rewards to further expand their returns.

8. ChainCatcher: What is the biggest challenge Unamano faces in the staking protocol process, or what part is most likely to create barriers?

Darryl: For us, the core challenge is to quickly guide Ethereum community developers to launch their projects on the platform. Discovering quality projects is a long and energy-consuming process that requires continuous investment.

Our current advantage is that we can help users pursue returns while ensuring that their principal has no loss. Our judgment of the market in the later stage is that it is unlikely to exit the bear market in the short term. Although the Shanghai upgrade has led to a wave of recovery, the market will still remain in a bear phase afterward. During this phase, everyone is hoarding coins due to the continuous crises in the industry, leading to a high aversion to risk and a preference for more conservative investment strategies, which can be seen from the continuously rising TVL in Ethereum.

9. ChainCatcher: What advice do you have for stakers in light of the upcoming Shanghai upgrade?

Darryl: In the pursuit of returns, it is still important to pay attention to risk control.** The original intention of staking was to pursue stable returns, but now many staking behaviors have become a high-leverage process, with many repeated staking protocols emerging around increasing yield.

In fact, the entire blockchain finance system is quite similar to many traditional finance methods, just that traditional financial methods have been moved on-chain. In the traditional world, banks sell three types of products: first, fixed income products with fixed interest; second, principal-protected financial products (fixed income+), where floating returns exceed the upper limit of traditional fixed income products; third, stock-type funds. In the traditional world, principal-protected financial products first use deposits to buy very safe assets (such as government bonds) to generate the first layer of returns. On top of this return, they then use interest to invest in high-leverage income products, such as options, secondary market stock-type funds, bonds, etc.

However, there is an important prerequisite: the ability to find a safe source of returns for the first layer. In the crypto industry, there has been a lack of a large-scale underlying asset that can provide safe and stable returns. After the Ethereum upgrade, POS mining returns have become the true "government bonds" of the entire industry—the first truly risk-free super-class underlying asset that can accommodate at least 100 billion dollars.

After the Shanghai upgrade, the staking rate is likely to double, reaching over 60 billion dollars. The emergence of "government bonds" in the crypto industry after the Shanghai upgrade means that almost all financial derivative products based on government bonds in the traditional world can be replicated in the crypto industry.

However, so far, most of the leveraged methods in traditional finance have not yet produced stable product forms on-chain. Relatively speaking, there are currently two types of leveraged methods on-chain: options trading and circular lending. The former can achieve complete transparency on-chain; the latter can achieve high annualized returns, but the protocol has risks that are difficult to control, such as facing runs during deleveraging.

The nested protocols in blockchain finance are similar; there are many leveraged processes in obtaining returns, and when one of the nodes has a problem, it may trigger a series of explosions.

10. In this wave of the Shanghai upgrade, which projects do you think are undervalued in the staking track?

Darryl: In the long run, I am quite optimistic about Rocket, SSV, and EigenLayer.

First, Rocket is a decentralized active pool, and its future potential may be higher than that of Lido. Recently, Rocket Pool has also prepared to lower its staking threshold from 16 ETH to 4 ETH, further reducing the barrier to staking.

After the SSV protocol was released, it significantly reduced the security risks during staking. At the same time, the emergence of re-staking protocols like EigenLayer will greatly enrich the staking landscape, similar to the previous phenomenon of a hundred flowers blooming in DeFi protocols.

The demand in the LSD market is actually quite simple, mainly revolving around safety and returns.

For example, SSV solves the problem of multi-party private key management during staking, while EigenLayer's approach of solving trust layer issues while providing users with dual staking returns is also highly sought after.

11. ChainCatcher: Aside from the Shanghai upgrade, what other trends in the LSD track are worth paying attention to this year?

Darryl: The staking track will be more exciting after the Shanghai upgrade than before.

The main purpose of the Shanghai upgrade is to release liquidity. Lido was originally designed to solve liquidity issues, and once liquidity is released, the ETH in everyone's hands will flow to various places. More innovative models will emerge to meet everyone's staking needs, and the staking track will present a state of a hundred flowers blooming.

Recently, many new play styles have been discovered, such as the staking protocol 0xAcid, which combines composite assets with real returns.

The hybrid algorithm stablecoin protocol Frax Finance has launched an Ethereum liquid staking product, frxETH, which imaginatively "mints" frxETH out of thin air and deposits it into the Curve pool, reducing the bribery costs for Convex.

Therefore, the main focus of the LSD track this year will still be on how to recombine LSD LPs like Lego after the upgrade to maximize the utilization of funds.

12. ChainCatcher: What do you think about the recent "crackdown" by the SEC on staking in the U.S.? Is there a possibility that staking could be securitized? What impact will this have on the staking track's landscape?

Darryl: The SEC's regulation affects centralized staking platforms, which is good for us and decentralized platforms like Lido, as decentralization is not within the regulatory scope and relies on contracts to complete the staking process. The overall demand for staking still exists, so some users will shift from centralized platforms to decentralized ones.

As for the possibility of staking being securitized, it is not very high because overseas regulation of crypto assets is still quite sensitive, especially after the FTX collapse, which has caused losses for banks involved in cryptocurrencies.

13. ChainCatcher: You mentioned earlier that you believe we will remain in a bear market for a long time this year. Under what circumstances do you expect the market to transition from a bear market to a bull market?

Darryl: It's difficult to predict the exact timing, but looking back at each previous bull market, there has always been a mainstream technological iteration and new play styles emerging, leading to continuous market rises, such as public chains and DeFi.

Currently, discussions are mainly around the Shanghai upgrade, storage, and other existing topics, and there has been no new content emerging in the entire track, so it can only bring about a small-scale recovery. The next bull market will still require new and larger iterations to emerge. For example, in the traditional internet industry, after the narrative of mobile internet gradually solidified, internet companies began searching for new tracks, and the emergence of ChatGPT sparked a new narrative.