iLRTs are Liquid Restaking Tokens that represent a unique LST. As a result, users that stake their LSTs will receive an iLRT that corresponds only to that specific LST. In comparison to Native LRTs (nLRTs) and basket-based LRTs (bLRTs), iLRTs offer many advantages and new features to take into consideration before choosing the best restaking strategy.

Advantages

• Isolated Risk: When it comes to iLRTs, the risk is completely isolated within each LST. This approach eliminates the user’s exposure to the volatility of other assets, as opposed to what happens with basket-based LRTs, where the user’s profitability depends as well on a greater number of factors.

• Transparency: iLRTs offer additional transparency in comparison to basket-based LRTs, as an iLRT is dedicated to a single LST, instead of representing a basket where LRTs’ weights are undefined or undisclosed. bLRTs introduce additional complexity and risk due to the management of these weights within the basket, that, most of the time, are not available to users. To prevent this situation, iLRTs emerged as a feasible solution and represent a trusted partner to LSTs.

• Easiness to attract TVL: One of the greatest advantages of LRTs is to have a higher yield than LSTs. However, a native restaking strategy can even offer users a lower APY than some well-established Liquid Staking Protocols, due to associated fees, for instance. As a result of this situation, nLRTs cannot be competitive in the long run and users may change instead to an isolated restaking strategy.

• Friendliness to LSTs: The purpose of iLRTs is to earn additional yield on LSTs. Any user that chooses a native LRT strategy will stake his or her ETH to directly receive an LRT, without the actual need for an LST. This approach reduces the demand for LSTs, possibly causing a disruption in the DeFi ecosystem, as users may stop using LSTs to get higher rewards.

• Possibility to create pools: Protocols that are interested in capturing swap fees to earn additional rewards on top of traditional fees, may find it profitable to create and launch pools dedicated to iLRTs.

Limitations

• EigenLayer Caps: EigenLayer's policy of limiting the restaking of LSTs could, over time, compromise its neutrality. This would call for the lifting of those caps. When that happens, users who opted not to exchange their LSTs for nLRTs are likely to turn to iLRTs instead.