Introduction

AVSs can distribute the restaking rewards in any ERC20 token. However, most of users will receive small, fractional amounts (more trouble than they’re worth to claim or trade in swap pools). It can lead to frustrating experiences and poor returns for stakers, while AVS may see a low token utilization and increased selling pressure.

LRT² (read as LRT Square) is a unified restaking rewards protocol as a vault which holds the rewards tokens as underlying assets. Through LRT², LRT projects can pool AVS rewards into a single vault and issue vault share tokens to their stakers (or distributor contract). This system cuts transaction costs and streamlines the rewards process, great for those with smaller stakes who might find it easier to manage and trade their shares collectively. Larger stakeholders can redeem and possibly arbitrage, which will drive the market price of LRT² token.

The below Figure 1 shows the comparisons of AVS rewards distribution by an LRT project with/without using LRT². It decomposes the many-to-many relationship into many-to-one and one-to-many relationships.

Figure 1: Comparisons of AVS rewards distribution by an LRT project with/without using LRT².

LRT² will have a governance token which determines which AVS tokens to whitelist and which LRTs can deposit rewards and mint shares. The governance token will also manage its own treasury, accumulating fees to grow its value over time.