Solving the Cold Start Problem

Making ETH available for the withdrawal buffer has two technical dependencies that can be done concurrently, full withdrawal from the Ethereum beacon chain and EigenLayer, which collectively can take 7 - 10 days.

1. Exiting the Ethereum Beacon Chain - Can vary from a day to 8.9 days or more as of this writing (Exit Queue + Sweep Delay). https://www.validatorqueue.com/

2. Exiting EigenLayer - All funds unstaked from EigenLayer are required to go through a 7 day escrow period before being eligible to be fully withdrawn. https://docs.eigenlayer.xyz/eigenlayer/restaking-guides/restaking-user-guide/liquid-restaking/withdraw-from-eigenlayer

The withdrawal capacity for ezETH can be configured according to market demand. There may be times when the value of withdrawals requested is greater than the amount of collateral available to withdraw. The withdrawal buffer is updated hourly with new deposits, Renzo protocol staking rewards, and collateral being exited from either the beacon chain and / or EigenLayer.

In anticipation of the withdrawal launch, Renzo started exiting beacon chain validators the week of June 3rd but was dependent on the successful contract upgrade of withdrawals on June 10th / 11th to begin exits from EigenLayer. To build up the buffer capacity, Renzo began cooling down 1,000 ETH per hour from EigenLayer, targeting an initial buffer supply of 72,000 ETH / $255m / 6.7% of total supply being available in the first 72 hours. (In comparison, Lido had ~6.7m stETH in circulationand ~450k in withdrawalswhen the feature went live, roughly the same ratio.)

Throughout the first few days of withdrawals being live the protocol will be able to anticipate the demand for withdrawals and either decrease or increase full withdrawal from the beacon chain and / or EigenLayer. However, if the initial demand for withdrawals exceeds 72,000 ETH, users may have to wait for additional liquidity to be released (see “Exiting the Ethereum Beacon Chain” and “Exiting EigenLayer” above). E.g., if the demand for withdrawals in the first 3 days of the withdrawal feature going live is for 75,000 ETH, and if no new deposits or rewards generated, the remaining 3,000 ETH in withdrawal demand will need to be settled on a rolling basis going forward as collateral is exited from EigenLayer.