Investment Opportunities Under the Trend of Re-staking: In-depth Analysis of the Emerging Liquidity Re-staking Derivation Protocol Agilely

Introduction

After Ethereum transitioned to proof of stake, the issuance of wrapped ETH by the staking underlying protocol brought approximately 4% risk-free interest rate to the ecosystem. In the future, EigenLayer will further raise the benchmark interest rate to 6%-8%. On this basis, by leveraging, users are expected to achieve around 10% long-term stable returns. Agilely, as the first LSDFi protocol to embrace re-staked tokens, is worth paying attention to.

About Agilely

Agilely is a protocol that issues the stablecoin USDA. USDA is based on the Liquity model and is a full-chain interest-bearing stablecoin that guarantees users can earn interest simply by holding it, while also being anchored to 1 dollar, balancing yield and Liquidity.

This year, after the emergence of the LSD track, income-generating stablecoins with Liquidity, stability, and profitability have been favored by DeFi users. From Lybra to Gravita, Raft, Prisma, etc., the total TVL has reached 400 million USD. Agilely has innovations in both product and token design, and is expected to stand out.

The CDP-based stablecoin was first proposed by MakerDAO, but the high collateralization rate of 250% resulted in low capital efficiency. Liquity reduced the minimum collateralization rate to 110% through dual anchoring and a three-tier liquidation model, significantly improving capital efficiency. The LUSD it issued has remained stable at $1 through bull and bear markets, proving the reliability of the design. Agilely adopted Liquity's stability mechanism.

Liquity Stability Mechanism Review

The design of Liquity's CDP stablecoin LUSD includes:

• Soft/hard dual anchoring ensures price stability
• Stable Pool - Debt Redistribution - Recovery Mode Ensures Protocol Security
• Regulate supply and demand through changes in minting fees and redemption fees.

These modules work together to provide stability for LUSD.

Liquity's price stabilization mechanism

LUSD achieves price stability through a dual mechanism of hard peg and soft peg:

Hard pegging:

• 110% minimum stake rate shapes $1.1 price cap
• Hard redemption/repayment channel constraint $1 price floor
• The open arbitrage channel stabilizes the price within the range of [$1-redeem fee rate, $1.1]

Soft peg:

• Long-term strengthening of the market expectation that 1LUSD=1USD
• Algorithm adjustment one-time issuance fee
• Regulate supply and demand through issuance rates and redemption rates.

Liquity's liquidation mechanism

Liquity adopts a three-tier liquidation mechanism:

1. Stability Pool: As the primary clearing counterparty
2. Position Reallocation: Activated when the stable pool LUSD is insufficient.
3. Recovery Mode: Triggered when the system's total stake rate is below 150%.

The stable pool is the most commonly used liquidation method, while the latter two mechanisms are mainly used for safety protection in extreme cases.

Liquity's supply and demand control mechanism

Liquity controls the supply and demand of LUSD by adjusting the minting and redemption fees:

• When no one redeems, the minting and redemption fee rates are reduced.
• When the redemption increases, the redemption fee rate will also rise.

This mechanism is relatively defensive, mainly by increasing the redemption fee rate to prevent large-scale redemptions.

Agilely's Innovative Mechanism

collateral

Agilely supports interest-bearing assets such as ETH, mainstream wETH, and GLP as collateral, and will integrate re-staking tokens in the future to enhance the USDA interest rate.

interest rate model

Agilely made the following modifications based on Liquity:

• Minting Fee: Increased the decay factor
• Redemption Fee: BaseRate + 0.5%
• Borrowing fee: Introduce ADI( Agilely Dynamic Interest) to regulate the total currency supply

stability mechanism

Hard peg:

• 110% MCR guarantees the price ceiling
• Redemption channel guarantees the price floor

Soft peg:

• Market sentiment game reaches 1USDA=1USD
• ADI controls the issuance of USDA

clearing mechanism

Agilely has optimized the three-layer liquidation base of Liquity:

• Pre-settlement interface to lower participation thresholds.
• Optimized to Smart Stability Pool for more efficient fund allocation

PSM module

Agilely sets the PSM module to capture RWA returns and diversify protocol income.

Value Flow within the Protocol

Agilely's sources of income include:

• Minting/Redeeming and Lending Fees
• PSM transaction fee
• Stability Pool Additional Fee
• Collateral earnings
• RWA yield in PSM

These earnings flow out in the following ways:

1. ABI flows to USDA holders, LPs, and stable pool stakers.
2. veAGL holders receive the protocol's real yield
3. The remaining income is allocated to the stable pool

Token Design

Utility of AGL token:

• Governance: Lock dLP to obtain veAGL voting rights
• Revenue: veAGL can capture the real income of the protocol.

Summary

Despite the current concentration of funds in the BTC and Solana ecosystems, when EigenLayer goes live and raises the ETH benchmark interest rate, funds will flow back into DeFi. At that time, Agilely, with its excellent design, is expected to become the user's first choice. In the current phase, laying out the future for re-staking through Agilely may be a high-odds investment opportunity.