Interview with Renzo Founder: I Believe Everything Will Return to Ethereum

Interview: Kean, Foresight News

Interviewee: Lucas Kozinski, Renzo

Compiled by: Peng Sun, Foresight News

Restaking significantly reduces the usage costs for Ethereum developers and users, allowing developers to invest more effort and resources into developing decentralized apps with better user experiences. At the same time, it makes it easier for users to access these Ethereum-based applications at extremely low costs.

“I Believe the next explosion will still be on Ethereum” Renzo founder Lucas Kozinski states in an interview with Foresight News. Despite the explosive growth of Web3 applications not yet materializing, Lucas believes that the cost reduction of Rollups and the upcoming AVS service launching on EigenLayer will bring the potential for an explosion at the application layer.

The Renzo team is different from what we might imagine. Perhaps you’ve seen their $3 billion TVL, or perhaps you’ve seen their investments from VCs like Binance Labs, Maven11, OKX Ventures, and IOSG, but these are just flashy appearances.

The Restaking narrative began in January 2024, but Renzo, as the first LRT protocol to go live, was launched in December of last year. Despite all three founders being veterans of the crypto industry, Renzo started from scratch. They began their journey in the summer of last year, sustaining themselves solely on their own funds until meeting Maven11 in November in Turkey, without anyone receiving a salary. This is the second LRT project I’ve heard of this year that couldn’t pay salaries for several months last year, yet they both received investments from Binance Labs this year.

Surviving in the crypto industry is not easy, but Renzo’s success is not accidental. When you visit the Renzo website, you’ll find it integrated with many DeFi protocols and Layer2 networks. Behind all of this lies Renzo’s three-step strategy, pursuing liquidity, efficiency, and risk management. “We will start from the Ethereum mainnet, expand to L2, then enter decentralized exchanges from L2, integrate with CEXs, and ultimately users will be able to purchase and hold ezETH on Coinbase, OKX, and Binance,” says Lucas.

Modularity presents challenges for Ethereum, but to Lucas, this is a positive-sum game rather than a zero-sum. As EigenLayer’s AVS launches successively, reducing developers’ development costs on Ethereum and allowing for the sharing of Ethereum mainnet economic security, “everything will return to Ethereum.”

1. The Journey of a Crypto Veteran

Foresight News: Thank you for accepting Foresight News’ interview. Could you please introduce yourself and your team, as well as your experiences in the crypto industry?

Lucas Kozinski: Renzo has three founders: myself, James Poole, and Kratik Lodha. Each of us has 6 to 7 years of full-time experience in Web3. James has been a full-time engineering lead since 2016, I joined Web3 full-time in 2017, and Kratik Lodha, our research and product lead, entered the field in 2018.

I was born in Poland and moved to New York with my family when I was five. I first dabbled in crypto trading in 2014, but the Mt.Gox incident(security breach) caused me significant losses. Towards the end of 2016, I re-entered the market and experienced the bull run from 2016 to 2017. In early 2018, I joined the Tezos Foundation as a project lead, and in early 2020, I joined Tokensoft as Chief Strategy Officer and Chief Operating Officer.

At the end of 2021, I left Tokensoft to become the founder of Moonwell. It’s a lending protocol we launched on Moonbeam and Polkadot’s Kusama, still the largest DeFi protocol on Polkadot and the largest mining protocol on Base.

Kratik previously worked at Woodstock Fund, which invested in Moonwell, and that’s how we met. In May last year, Kratik left Woodstock, and I left Moonwell. From then until July, we discussed launching a project on EigenLayer. In August, James joined us as the third founding member, and so we started building Renzo last summer.

Foresight News: It’s great to see your journey to this point. Why did you choose the Restaking niche, and what prompted you to create Renzo? What do you envision Renzo becoming?

Lucas Kozinski: We’re very excited about developing on EigenLayer because it’s the first time I’ve noticed an open market in the Web3 space. The importance of an open market lies in allowing open innovation and competition.

Historically, when a new ecosystem launches, foundations typically do two things: they select projects they want to position well in the ecosystem and provide them with liquidity rewards. This structure has some challenges, the main one being difficulty in innovating, as only top projects can attract liquidity and funding. With EigenLayer, an open market, there won’t be situations where foundations only provide liquidity incentives to DeFi protocols. EigenLayer will allow for innovation, and whoever captures market share first, has the safest liquidity and liquidity distribution channels, and is the most efficient, will be the ultimate winner.

Additionally, as long as there’s complexity and fragmentation, we have the opportunity to create value for users. So, when you consider EigenLayer’s relationship with all AVS and operators, you realize it brings a whole new ecosystem and technology stack. By addressing these issues and improving user efficiency, we have many opportunities for value addition.

Foresight News: What is the team structure of Renzo? Where are the team members located, and how do you collaborate remotely?

Lucas Kozinski: Renzo now has 15 members, and we’ve grown very quickly. We doubled our team size from December onwards. Most Renzo members have known each other and worked together for many years, which is crucial because this team is self-organizing. While other projects may have only the CEO or leader making decisions, Renzo is very unique in that it’s a decentralized group. We have industry OGs who entered the field in 2016 and 2017; they’re very professional and have strong execution skills. While having a CEO or leader in charge of daily operations might create bottlenecks and hinder rapid development, Renzo operates differently.

Currently, Renzo has three departments: Engineering, with 10 full-time engineers; Product and Research, with two people; and BD Marketing and Operations, with three people. We established a foundation from the beginning, and most members are compensated directly from the foundation; they are foundation members.

We’re distributed globally, with 4 people in India, 1 each in Hong Kong, Australia, and Budapest, and several in the US. We’re a completely decentralized team. We have a synchronous meeting every Monday morning to align everyone’s views and discuss issues each person faces. The team self-organizes for the rest of the week because everyone is in different time zones. At the start of each workday, they note down their tasks and any issues on Slack. Half an hour before logging off, they provide a brief summary so we know they’re finishing work.

Foresight News: What do you consider the biggest obstacles/difficulties you’ve encountered in Renzo’s entrepreneurial journey?

Lucas Kozinski: The most challenging moments were actually when we were just starting to build and operate. At that time, nobody really understood what Renzo was, they thought the market wasn’t big enough and didn’t see its value. So, for a long time, we struggled without investors, community, or a product. But that experience builds up Renzo’s strength and that’s also why it succeeded.

We did face financial difficulties due to the pressure and struggles last year. It wasn’t until November when we met Maven11 in Turkey. Renzo’s culture is very humble; we were entirely self-sufficient and ensured money was used judiciously, sustaining ourselves for several months without salaries. Everyone worked voluntarily, essentially funding Renzo out of their pockets.

It’s hard to imagine how difficult it was, especially when you have to start from scratch, from nothing to seeking funding, to achieving what we have today. But we learned how to work under pressure; we have survival instincts, we’re bold and decisive, and we can quickly pivot strategies. We launched the product on December 18 and within 13 weeks, achieved over $2 billion TVL, becoming the fastest-growing liquidity re-staking protocol and a top EigenLayer project.

2. Renzo’s Three-step Strategy: Liquidity, Efficiency, and Risk Management

Foresight News: Could you please introduce Renzo’s products and business progress?

Lucas Kozinski: Currently, Renzo’s plan is divided into three stages: the first stage is to enhance liquidity and distribution, the second stage is to improve efficiency, and the third stage is portfolio construction and risk management, which will take approximately one to one and a half years.

Renzo is currently in the first stage, focusing on TVL and DeFi integration. Renzo has integrated over 50 DeFi protocols within 13 weeks and launched native re-staking on 5 Layer2 networks including BNB Chain, Mode, Linea, and Blast, with three more coming soon. Historically, projects that excel in liquidity distribution tend to capture a significant market share and gain user trust through liquidity allocation and integration. Without better products or higher yields, other projects find it challenging to enter the market. If Renzo offers high returns, the cost for other projects to enter and compete for market share becomes higher. Additionally, liquidity is paramount. The project with the strongest liquidity and highest integration level is likely to achieve the widest adoption. Renzo has strict liquidity requirements and provides Chainlink price feed services, which no other LRT protocol can offer. The market has always closely followed TVL as a leading indicator, and Renzo uses liquidity and DeFi integration as metrics to measure who is leading.

The second stage focuses on efficiency. Eigenlayer is complex, operating on the Ethereum mainnet, where each transaction incurs gas costs, reducing yields and returns for stakers. Next month, AVS (Automated Vault Services) will begin launching on EigenLayer, offering an efficient solution to return rewards generated by AVS to stakers. Traditional LST protocols find it challenging to expand after transitioning to LRT protocols, but Renzo can capture rewards and efficiently return them to our stakers.

The third stage, within the next 6 to 12 months, involves portfolio construction after AVS enables the “Slashing”feature. We have been collaborating with companies like Gauntlet for over three years, helping us establish risk and portfolio construction frameworks.

Foresight News: You’ve supported networks like Arbitrum, Linea, Mode, Blast, and BNB Chain in a very short time. What was the rationale behind this decision?

Lucas Kozinski: The revenue source for ETH holders comes from the Ethereum mainnet, and users cross-chain to Ethereum mainnet for arbitrage opportunities. If these networks are not supported, users on Layer2 will lose connection with TVL. Renzo migrates Restaking to L2, allowing users to continue native re-staking on Arbitrum, BNB Chain, Linea, Mode, and Blast with lower gas fees, providing the same DeFi integration as Ethereum mainnet. Renzo will then cross-chain these ETH back to Ethereum mainnet, contributing to EigenLayer’s economic security.

Foresight News: Renzo is the first Restaking project launched after EigenLayer. What sets Renzo apart from similar competitors in the market? What is its biggest advantage in terms of technology, product, and market?

Lucas Kozinski: We are the first Restaking project built entirely from scratch, with a new team, new investors, a new community, new TVL, and new integrations. Renzo doesn’t have an LST token but can offer native ETH rewards. The difference is that we don’t have to issue notes for the floating portion; this technology is outdated.

Most importantly, Renzo adopts a single-token model instead of a dual-token model. We don’t have Rebase and Reward-Bearing tokens; we don’t need to increase efficiency through LST and LRT tokens. Renzo is highly scalable, with integrated liquidity and high liquidity. Fundamentally, we have an efficient and clean technology stack, capable of effectively protecting AVS and efficiently returning rewards to our users with lower risk.

Foresight News: Many projects in the Restaking field focus on depositing and staking, but liquidity is critical for both public chains, DeFi, and LRT assets. What are the utilities of ezETH as an LRT asset? What are its future applications? Will there be various DeFi applications built on Renzo/ezETH?

Lucas Kozinski: The ETH re-staking market has determined that ezETH is the most liquid asset, and it will integrate with many protocols, gradually increasing its use cases and adoption rate. We’re particularly excited about the decreasing costs of Rollups, which will lead to explosive growth in Rollups and L2 on Ethereum. Now we must build the entire ecosystem, integrate with more projects, and expand our use cases. There will certainly be many customized Rollups focused on DeFi or user applications in the future. Just like AltLayer today, you can launch a Rollup within 3 to 5 days. These Rollups will use LRT, especially ezETH as their Gas token.

Foresight News: Recently, you collaborated with Polyhedra Network, providing $1.8 billion in economic security for its Bitcoin interoperability protocol. Can you elaborate on how you will expand into the Bitcoin ecosystem?

Lucas Kozinski: Renzo will focus on securing Bitcoin services and providing economic security for them. Projects like Babylon have attracted a lot of interest, and Renzo will serve as the re-staking token for these ecosystems. We’re having many discussions, but there are no commitments yet. However, these conversations are ongoing, and relationships are being established.

Foresight News: Cobo previously introduced an article: “EigenLayer Restaking Risks and Best Practices,” mentioning contract risks, LST risks, and withdrawal risks for current Restaking protocols. How does Renzo manage and protect user assets?

Lucas Kozinski: Like any other DeFi protocol, I’ve always ensured that community members are aware of the risks associated with using protocols. From day one, Renzo hired an auditor and open-sourced smart contracts, with each contract upgrade being re-audited. We launched the Immunefi bug bounty program and use enterprise-level node operators. Renzo also employs on-chain monitoring services like Hexagate to identify malicious activities. If any suspicious activity is detected on-chain, deposits are automatically paused, and withdrawals are halted promptly.

We’ve been very cautious and gradually introduced new features and risks. Withdrawals are currently disabled because Renzo launched just 14 weeks ago, and EigenLayer is still deployed on the M1 contract, undergoing an upgrade to the M2 contract, in preparation for the AVS mainnet. All other withdrawal protocol changes have a 10-day lock, requiring contract upgrades, including upgrading withdrawal logic, re-auditing, and then enabling it on the mainnet.

Because we have to update the code again and introduce additional risks, Renzo strategically decided to temporarily not enable withdrawals for the M1 contract. Although the team is ready to enable withdrawals, we are waiting for EigenLayer so Renzo can start securing AVS, after which we will enable withdrawals on both contracts. However, there will be a cooldown period for withdrawals, allowing Renzo to identify any vulnerabilities or malicious attackers. If issues arise, Renzo protocol, foundation, and DAO will be able to pause withdrawals.

3. “I Believe Everything Will Come Back to Ethereum”

Foresight News: What is Renzo’s roadmap and future plans for 2024?

Lucas Kozinski: Firstly, we will integrate more DeFi on the mainnet. Renzo is the first LRT protocol, and protocols like Compound, Aave, and Morpho have proposed governance proposals to use ezETH as collateral. Renzo will also collaborate with MakerDAO to use ezETH as collateral for DAI.

Simultaneously, ezETH will expand to exchanges’ public chains like X Layer and BNB Chain and integrate with CEX. Eventually, users will be able to purchase and hold ezETH on platforms like Coinbase, OKX, and Binance. Our goal is to start from the Ethereum mainnet, expand to Layer2, and then enter decentralized exchanges from Layer2. This will not only create many new products and integrations for retail investors on centralized exchanges, but also receive support from platforms like Coinbase Prime, OKX, and Binance. In the future, Renzo will integrate with services like Fireblocks, Ankr, Ledger, Metamask, and wallets like Binance Web3 Wallet, OKX Web3 Wallet, Coinbase Wallet, etc.

Secondly, Renzo will begin protecting AVS. Currently, there are about 60 AVS preparing to launch on EigenLayer. Whether you hold ezETH in a self-hosted wallet, exchange, or elsewhere, you will benefit from EigenLayer and airdrops. After AVS launches various point systems, ezETH will be ubiquitous, and airdrops and real rewards will form a permanent incentive loop as ezETH continues to accumulate.

Thirdly, Renzo will truly focus on EigenLayer governance, portfolio management, and risk management, which may continue until the end of the year. We will seek new L2 opportunities, collaborate with ecosystem projects, and ensure ezETH settles as a Gas token on different chains. For users, you can deposit WETH on the Renzo app without worrying about being an LP on DEXs or lending protocols, and you can easily access new revenue opportunities with a single click.

Foresight News: Renzo has not disclosed any information about tokens yet. Could you reveal some information?

Lucas Kozinski: I can’t reveal too much here. We try not to set expectations for the community too much. As I mentioned earlier, ezETH will be ubiquitous, and there will be many use cases. Renzo’s overall goal is to make ezETH accessible to everyone and allow for free staking of ezETH. I think one mistake that Web3 projects often make is misleading community members and promising things they may not be able to deliver.

Foresight News: What opportunities and challenges do modular blockchains like Celestia present to Ethereum?

Lucas Kozinski: We see more narratives around Restaking and modularity, which are gaining more attention. I believe their adoption rates will be higher, and there will be more possibilities for future use cases. As Renzo matures, DAOs will have the opportunity to figure out what this actually means and what risks they are willing to take. Fundamentally, it’s not a zero-sum game. The bigger the restaking narrative, the more opportunities everyone in the ecosystem will have.

Foresight News: Where do you think the value proposition of Restaking lies? What innovations and challenges do you foresee in the restaking niche in the future?

Lucas Kozinski: Let’s talk about challenges first. Firstly, it’s a very complex ecosystem. As more projects build in the Restaking space, there will be more fragmentation and changes. Renzo is closely working with EigenLayer operators and AVS to address these issues. For Renzo, this means more opportunities to improve efficiency and provide value to stakers. So, the biggest challenge is how to make things simple? And how to abstract away all the complexity for users because that’s where the value lies and that’s what excites us.

I believe the next explosion will still be on Ethereum. Of course, when we talk about Ethereum now, you might think of Rollups, Base, or large DeFi ecosystems. But what we haven’t seen in Web3 yet is explosive growth in real applications that users want to use. People usually don’t use blockchain as the underlying settlement layer for transactions because it’s too costly, but Restaking or Rollups can solve this problem. We will bring a lot of innovation, even though we don’t know what kind of services or applications people want to launch. But fundamentally, they will be easy to launch on L2 and L3 and very cheap. The new cycle will see many customized applications launching, and they will need new AVS services. Applications launched with AVS will not only bring additional income and reward opportunities to Renzo holders but will also expand to other ecosystems.

We believe everything will come back to Ethereum. Now Base’s transaction costs are lower than Solana, and it’s fully decentralized. That left one thing you have to solve: user experience(UI, UX). If you’re an Ethereum developer, you won’t need to invest tens of millions of dollars in infrastructures, just focus on building user-facing products.