Puffer
Puffer is a liquid restaking protocol that generates yield through its pufETH token.
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- Website
- Tags: Staking
- TVL: $527.1M (Rank #41)
- TVL Ranking by Staking: #0
- Blockchain: Ethereum
- Chain TVL
- Ethereum: $527.12M
- Latest protocol version launched recently in 2024; maturity less than three months increases technical risk as smart contracts are not battle-tested
- Top 5% by total value locked reduces risk
- Multisig wallet controls protocol upgrades
- Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
- Timelock is at least 48hrs, which provides users with sufficient time to exit if any malicious upgrades are approved
- No governance token and/or contracts are fully immutable
- No death spiral concerns
- This protocol is susceptible to risks related to staking a token to secure a network, such as slashing events
What is Puffer
Puffer is a decentralized native liquid restaking protocol built on top of EigenLayer. The protocol serves to make native restaking on EigenLayer more accessible so anyone can run their own validator to earn rewards. Puffer is driven by stakers and node operators. Anyone can join to become a node operator by locking validator tickets (VT) and 1 ETH as collateral. VTs are ERC-20 tokens that grant the holder the right to run a staker-funded Ethereum validator for a day. VTs are minted by ETH deposits, which go towards compensating pufETH holders for financing validators. The price of a VT is set based on the expected daily earnings from running a validator, with a discount to incentivize purchases. Node operators get to run a 32 ETH validator and keep 100% of their PoS rewards until they run out of VTs. Node operators can further boost their returns by joining restaking modules and delegating the validator's ETH to a restaking operator in exchange for restaking reward commissions. Stakers deposit any amount of ETH to help fund the protocol's 32 ETH node-operator-controlled validators. Stakers receive the native liquid restaking token (LRT), pufETH, in exchange, which grows in value as the protocol mints VTs and receives restaking rewards. Since node operators pay ETH upfront to run a validator, this means the value of pufETH increases every time a VT is minted.
How Puffer makes money
Puffer receives rewards from the VTs minted to run validators and from restaking rewards generated by restaking operators. The protocol takes a fee to support its growth and to provide the governance token more utility. VTs cost ETH to mint and are split between several parties. Guardians, a respected group of trusted and permissioned nodes tasked with ensuring stable operation of the protocol, are paid a fee to incentivize honest behavior and cover gas fees. The Puffer treasury is allocated a portion as a protocol fee, and the remainder is distributed to stakers.
How you make money on Puffer
You can generate additional yield on top of your LSTs by depositing into Puffer to earn restaking rewards. The unlocked liquidity with pufETH can also be redeployed within several popular DeFi protocols to generate additional yield on top of the staking and restaking rewards. Alternatively, you can as a node operator by locking VTs and at least 1 ETH of collateral. Node operators are entitled to 100% of their validators' execution and consensus rewards.