Overview
Renzo launched in late 2023 as a liquid restaking protocol built on EigenLayer. Users deposit ETH or LSTs (stETH, wBETH) and receive ezETH, a liquid restaking token representing their restaked position. Renzo delegates deposited ETH to a curated set of EigenLayer operators across multiple AVSs (Actively Validated Services), aiming to optimize restaking yield and diversify operator risk.
Renzo grew explosively during the EigenLayer points farming era (late 2023 through mid-2024), becoming one of the largest LRT protocols with multi-billion dollar TVL at peak. The protocol introduced "ezPoints" — its own loyalty program layered on top of EigenLayer points — creating a double-incentive structure that attracted aggressive depositors.
However, Renzo's journey has not been smooth. In April 2024, ezETH experienced a significant depeg, trading at a ~20% discount to ETH on secondary markets. The depeg was triggered by sell pressure after the REZ token airdrop announcement, combined with leveraged ezETH positions unwinding on lending platforms. The incident highlighted the fragility of LRT pegs and the risks of leveraged restaking.
The REZ governance token launched in April 2024, with a distribution that was controversial within the community. Renzo operates on Ethereum and several L2s.
Smart Contracts
LRT Architecture
Renzo's contracts manage deposits, EigenLayer delegation, operator management, and ezETH minting/burning. The protocol uses a RestakeManager contract as the core entry point, with strategy contracts handling delegation to specific operators and AVSs.
Withdrawal Mechanism
EigenLayer withdrawal processes add complexity — unstaking from EigenLayer involves a multi-day delay. Renzo manages withdrawal queues and liquidity buffers to facilitate ezETH redemptions, though full redemption at NAV can take days to weeks during high-demand periods.
Code Quality
Renzo's contracts are open source and have undergone audit reviews. The rapid growth phase led to fast deployment cycles, and the codebase has been through iterative improvements. The contracts handle complex cross-protocol interactions between Renzo, EigenLayer, and various AVSs.
Security
The ezETH Depeg
The April 2024 depeg is the defining security event. While not a smart contract exploit, it demonstrated systemic risk in the LRT ecosystem. Key factors: concentrated sell pressure after the REZ airdrop snapshot, cascading liquidations of leveraged ezETH positions on Pendle and lending protocols, and insufficient secondary market liquidity to absorb the selling. ezETH traded at approximately $700 (vs ~$3,000 ETH) on some DEXs before recovering.
Audit History
Renzo has been audited by Halborn and other security firms. The contracts passed audits, but the depeg event showed that smart contract security alone does not ensure LRT stability — market dynamics, leverage, and liquidity matter equally.
EigenLayer Risks
Like all LRT protocols, Renzo inherits EigenLayer's risk profile: slashing by AVSs, operator misbehavior, and EigenLayer smart contract risk. These are layered on top of Renzo's own contract risks.
Track Record
Beyond the depeg event, Renzo has not suffered a direct smart contract exploit. However, the depeg caused significant losses for leveraged users and damaged market confidence in ezETH's reliability.
Decentralization
Operator Management
Renzo delegates to a curated set of EigenLayer operators selected by the team and governance. The operator set provides some diversification but is ultimately controlled by protocol governance. Operator selection criteria and transparency have improved over time.
Governance (REZ Token)
REZ is the governance token, launched in April 2024. The token enables governance participation and incentive direction. The airdrop distribution was controversial — some community members felt allocations were unfair, creating governance trust issues from day one.
Protocol Control
The Renzo team retains significant control over protocol operations, strategy selection, and operator management during the early growth phase. Decentralization is progressing but the protocol is still relatively centralized.
Adoption
TVL & Growth
Renzo reached multi-billion dollar TVL at peak during the points farming era. Post-airdrop, TVL has moderated as some depositors withdrew after receiving REZ tokens. Current TVL remains significant but below peak levels, reflecting the broader LRT market normalization.
Post-Points Reality
The critical question for Renzo is whether TVL is sustainable without points incentives. Organic restaking demand (driven by actual AVS rewards rather than speculative points) is developing but not yet at a level that would justify pre-airdrop TVL levels.
DeFi Integration
ezETH is widely integrated across DeFi — available on Pendle, accepted as collateral on lending platforms, and traded on DEXs. The depeg event caused some integrators to reassess risk parameters for ezETH, tightening collateral factors.
Tokenomics
REZ Token
REZ launched in April 2024 with a controversial distribution. The token provides governance rights and is used for incentive programs. Total supply and vesting schedules follow standard VC-backed token structures.
Airdrop Controversy
The REZ airdrop created community friction — criteria favored certain depositor profiles, and the allocation methodology was criticized. The sell pressure from airdrop recipients directly contributed to the ezETH depeg, creating a negative feedback loop between tokenomics and protocol stability.
Revenue Model
Renzo earns fees on restaking rewards. As EigenLayer's AVS reward ecosystem matures, fee revenue should grow. Current revenue is limited, as the primary incentive during the growth phase was points/airdrop speculation rather than actual restaking yield.
Risk Factors
- Depeg precedent: The April 2024 ezETH depeg demonstrated that LRT pegs can break under market stress, causing significant losses for leveraged users.
- Points-driven TVL: Much of Renzo's growth was incentive-driven. Sustainable TVL requires organic restaking demand that is not yet proven.
- Leverage risk: ezETH is widely used as collateral for leveraged positions. If ezETH depegs again, cascading liquidations would amplify losses, as seen in April 2024.
- Airdrop trust issues: The controversial REZ distribution damaged community trust, a deficit that takes time to rebuild.
- EigenLayer dependency: All LRT protocols depend on EigenLayer's success. AVS economics must mature for restaking to deliver on its promise.
- Competitive pressure: Multiple well-funded LRT protocols compete for the same depositor base with similar offerings.
Conclusion
Renzo was one of the most successful LRT protocols by TVL during the EigenLayer points era, demonstrating strong execution in attracting deposits and building DeFi integrations. The protocol addresses a real need — simplifying EigenLayer restaking into a fungible, composable token.
However, the 5.4 score reflects significant concerns. The April 2024 ezETH depeg was a material risk event that demonstrated the fragility of LRT pegs under market stress. The controversial REZ airdrop damaged community trust. The protocol's adoption was heavily points-driven, raising sustainability questions. Renzo is technically functional and well-integrated, but must prove sustainable value creation beyond the speculative restaking narrative to justify a higher assessment.