Unlocking DeFi’s Potential: Magpie’s Strategic Alliance with EigenLayer and the Rise of Eigenpie

Greythorn Asset Management
7 min readFeb 6, 2024

Project Name: Magpie XYZ
Network: Arbitrum, Binance
Project Type: Yield provider Multi-chain platform.
Ticker: $MGP (natively cross-chain token)
Cryptocurrency Rank: #752
Market Cap: $29.3M
FDV: $92.2M
Circulating Supply: 319.44M (31.94%)
Total Supply: 1B

Opening Remarks

Magpie, a prominent multi-chain yield protocol, has announced a strategic integration with Ethereum’s re-staking protocol, EigenLayer. This significant development led to the formation of the SubDAO Eigenpie, leveraging EigenLayer’s technology to enhance re-staking services. Additionally, Eigenpie is preparing to launch the EGP token, focusing on governance and profit-sharing.

This paper delves into the Magpie ecosystem, offering a detailed analysis of its potential impact and future prospects in the DeFi landscape.

Project Overview: Magpie XYZ Ecosystem

Magpie XYZ stands as a comprehensive ecosystem of DeFi protocols, enhancing yield and veTokenomics across multiple blockchains. As its pioneering protocol, Magpie, developed on Wombat Exchange, plays a crucial role:

  • Innovative veTokenomics: Revolutionising the traditional model for user-centric benefits.
  • mWOM Token Conversion: Facilitating staking and earnings without long-term locking.
  • Diverse Earning Opportunities: Allowing various asset deposits for additional earnings.
  • Vote-Locked MGP (vlMGP): Enhancing cost-effective governance participation.

Wombat Exchange Features

  • Multi-chain Capabilities: Known for scalability and low slippage.
  • Single-Sided Staking: Catering to stablecoins and pegged assets.
  • veWOM Tokens: Providing benefits based on lock-up duration.

Revenue Distribution from Wombat Exchange:

  • 80% to Liquidity Providers
  • 12% to mWOM Stakers
  • 8% to vlMGP Holders
  • MGP Tokenomics: Magpie’s Governance and Revenue Sharing Framework

MGP serves as the cornerstone governance and revenue-sharing token within the Magpie ecosystem.

Key Features

  • Token Name: MGP
  • Networks: Arbitrum, Binance
  • Total Supply: 1 Billion
  • Circulating Supply: 319.44M (31.94%)
  • Market Cap: $22.3M
  • FDV: $70.2M
  • TVL: $19.57M
  • Cryptocurrency Rank: #883

Vote-Locked MGP (vlMGP) Mechanism

Vote-Locked MGP is the locked version of MGP. MGP tokens can be locked on Magpie, converting them into vlMGP at a 1:1 ratio. Advantages:

  • Revenue share from the platform
  • $MGP staking rewards
  • Increased voting influence
  • Participation in governance
  • Earning bribes and forfeited rewards

Lock/Unlock Dynamics of vlMGP

In the Magpie ecosystem, MGP tokens locked as vlMGP stay in this state indefinitely, granting passive income and governance rights to holders. To unlock, a “Start Unlock” process begins a 60-day Cool Down period, during which vlMGP slowly becomes liquid.

Holders can “Force Unlock” earlier by paying a penalty, starting at 80% of the locked MGP on the first day, and decreasing over the 60 days.

During the Cool Down, passive income continues, but voting rights are suspended. After 60 days, vlMGP fully unlocks without penalty, restoring all token rights.

MGP Token Distribution

The distribution of MGP tokens is structured as follows:

  • Liquidity Mining: 450 million tokens (45%), with no initial unlock, up to 2% monthly unlock.
  • Team & Advisors: 175 million tokens (17.5%), no initial unlock, 6-month cliff, semiannual vesting over 4 years.
  • Community Treasury: 100 million tokens (10%), no initial unlock, block-by-block vesting over 5 years.
  • Ecosystem: 90 million tokens (9%), no initial unlock, block-by-block vesting over 3 years.
  • PancakeSwap IFO: 70 million tokens (7%), 30% initial unlock, block-by-block vesting over 3 months.
  • Strategic Sale: 50 million tokens (5%), no initial unlock, 3-month cliff, quarterly vesting over 3 years.
  • Airdrop: 30 million tokens (3%), 5% initial unlock, weekly vesting over 1 year.
  • PancakeSwap Syrup Pool: 24 million tokens (2.4%), no initial unlock, block-by-block vesting over 2 months.
  • Liquidity and Exchanges: 11 million tokens (1.1%), 100% initial unlock.

Vesting Schedule

Source: https://cryptorank.io/price/magpie/vesting

The SubDAO Model in Magpie’s Ecosystem

Magpie’s SubDAO model represents a significant innovation in the DeFi ecosystem, creating specialised sub-decentralized autonomous organisations to enhance veTokenomics-based protocols. This model establishes a symbiotic relationship between Magpie and its supported SubDAOs, driving mutual growth and contributing to the wider DeFi landscape.

Key features include:

  • Strategic Partnerships: Collaboration for mutual growth.
  • Treasury and Governance Benefits: Acquiring 20% token supply from each SubDAO post-vesting.

Benefits for vlMGP Holders

  • Access to SubDAO IDOs: Priority access to Initial DEX Offerings of SubDAO tokens.
  • Revenue Sharing: A share in the revenue generated by SubDAOs, creating a new passive income stream.
  • Voting Rights: Influence over decision-making within SubDAOs.

Current SubDAOs Overview

Penpie: Maximising Returns in Pendle Finance

  • Key Innovations: Leveraging Pendle Finance for higher APR and mPENDLE token conversions.
  • PNP Token: Central to governance, with vlPNP enhancing passive income and governance influence.
  • TVL: $143.64M

Radpie: Yield Optimization in Radiant Capital

  • Innovations: Utilising dLP tokens for governance and RDNT emissions, with mdLP conversions for enhanced yields.
  • RDP Token: Governing token with vlRDP offering passive income and governance participation.
  • TVL: $23.66M

Cakepie: Bolstering PancakeSwap’s Governance and Yield

  • Key Features: Cakepie’s Bribery Market offers a unique platform for vlCKP holders to influence CAKE emissions and gain rewards more efficiently than traditional veCAKE locking.
  • CKP and vlCKP Tokens: Central to Cakepie’s influence, with vlCKP allowing participation in governance and the Cakepie Bribery Market.Protocols on PancakeSwap can attract additional votes by offering bribes to vlCKP holders, liquidity providers benefit from potentially higher APR% without locking CAKE, and governance voters gain cost-effective power through CKP tokens.
  • TVL: $16.41M

Upcoming SubDAO: Eigenpie

Eigenpie emerges as a transformative SubDAO under Magpie. Integrated with EigenLayer technology, Eigenpie aims to elevate Ethereum’s functionality and user interaction with its new approach to liquid re-staking.

Understanding Liquid Restaking Protocols

1. Basket-based Liquid Restaking (bLRT)

  • Function: Facilitates depositing multiple LSTs for a single LRT, diversifying assets.
  • Advantages: Offers asset diversification, consolidated liquidity, and user convenience.
  • Challenges: Involves complex management and potential concentration risks.

2. Isolated Liquid Restaking (iLRT):

  • Function: Focuses on depositing a single LST for one LRT.
  • Advantages: Provides controlled risk, simplifies incentives acquisition, and improves DeFi composability.
  • Challenge: May lead to fragmented liquidity.

3. Superfluid Restaking:

  • Concept: An emerging idea for restaking LP positions, details yet to be fully explored.

Eigenpie’s Isolated Liquid Restaking Approach

Eigenpie innovates with an isolated liquid restaking model, enabling users to deposit LSTs and receive a uniquely restaked version. This adds an extra yield layer to Ethereum investments and aims to improve capital efficiency.

To reduce the risks linked to individual LSTs, Eigenpie customises a distinct restaked variant for each LST, significantly mitigating vulnerabilities within the platform.

EGP Tokenomics

  • Token Name: Eigenpie Token (EGP)
  • Total Supply: 10 Million
  • Token Type: ERC-20
  • Distribution: IDO (40%), Community Incentives (35%), Magpie Treasury (15%), Early Supporters Airdrop (10%)

EGP serves as the governance and revenue-sharing token, promoting decentralised decision-making and financial rewards. Its wide integration with various protocols is designed to enhance utility and appeal to a diverse user base.

Eigenpie collaborates with key DeFi players and is in the process of conducting thorough audits. Additionally, it is implementing an advanced multi-signature mechanism in its contracts to enhance the platform’s security and integrity.

The rollout of Eigenpie is focused on driving user involvement, improving reward structures, and promoting interaction with the EigenLayer infrastructure.

Furthermore, Eigenpie is planning to implement a rewards system, designed to acknowledge and encourage active participation from its members, especially in areas such as LST deposits and user referrals. For those of you interested in Eigenpie’s developments, detailed information about the EGP IDO can be found here.

According to recent information shared on their socials, Eigenpie has opened its LST Pre-Deposits Window, allowing users to pre-deposit selected LSTs such as stETH, rETH, mETH, and sfrxETH. This opportunity is available until February 9 at 7 PM UTC.

For each ETH worth of LST deposited, users earn one Eigenpie point per hour, with a double point reward for the first 15 days. These points contribute to a 10% share in the total EGP supply and a 60% share in the EGP token IDO. Additionally, starting from February 5 at 8 PM UTC, depositors will also accumulate EigenLayer points.

Bullish Fundamental Factors

  • The $MGP ecosystem is rapidly growing, with over $30M in $ETH Liquid Staking Tokens restaked on Eigenpie within 12 hours of its predeposit window.
  • There’s a steady increase in Total Value Locked.
  • The community around $MGP is robust and engaged.
  • Magpie’s DAO and SubDAO model focuses on stable governance and boosting user participation by creating new pie tokens for each project. Without introducing Penpie and PNP token on Pendle’s platform, there might be less incentive for users to convert PENDLE to mPENDLE. This approach also supports maintaining liquidity and the balance between mPENDLE and PENDLE.

Bearish Fundamental Factors

  • The market is crowded with many projects like Convex, Aura Finance, and Yearn Finance, focusing on yield enhancement.
  • $MGP’s market capitalization remains small due to intense competition.
  • The majority of TVL is concentrated in Penpie, linked to Pendle’s success.
  • Although EigenPay is a strategic move to capture the staking market, it faces stiff competition from numerous new projects.
  • $MGP is not yet listed on major exchanges, limiting its exposure.
  • The space is highly competitive with many entities offering similar staking services.
  • Once you restake your ETH, it becomes temporarily locked, meaning it cannot be converted back for the time being.

References

Magpie Website: https://www.magpiexyz.io/

Magpie Docs: https://docs.magpiexyz.io/

Magpie Medium: https://blog.magpiexyz.io/

Magpie DeFiLlama: https://defillama.com/protocol/magpie

Magpie DeBank: https://debank.com/official/Magpie_XYZ

Penpie Website: https://www.pendle.magpiexyz.io/stake

Penpie Docs: https://docs.penpiexyz.io/

Penpie Medium: https://docs.penpiexyz.io/

Radpie Website: https://www.radiant.magpiexyz.io/stake

Rappie Docs: https://docs.radpiexyz.io/

Radpie Medium: https://blog.radpiexyz.io/

Campie Medium: https://blog.campiexyz.io/

Cakepie Docs: https://docs.cakepiexyz.io/

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Greythorn Asset Management

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