What is King Protocol?
King Protocol (formerly LRT²) is a unified restaking rewards protocol designed to streamline and optimize the distribution of restaking rewards from various restaking network protocols. It acts as a vault that holds these diverse rewards tokens as underlying assets.
Through King Protocol, LRT projects can pool restaking network protocol rewards into a single vault and issue vault share tokens to their stakers (or distributor contract). This system cuts transaction costs and streamlines the rewards process, great for those with smaller stakes who might find it easier to manage and trade their shares collectively.
The Problem King Protocol Solves
- Fractional and Diverse Rewards: Restaking network protocols can distribute rewards in numerous different ERC20 tokens. Users often receive small, fractional amounts of these tokens, which can be difficult and costly to claim or trade on swap pools (due to high transaction fees and slippage for small amounts).
- Poor User Experience and Returns: This leads to frustrating experiences and potentially poor net returns for stakers, especially those with smaller stakes.
- Low Token Utilization and Selling Pressure: For restaking network protocols, this can result in low utilization of their reward tokens and increased selling pressure as users try to offload small, illiquid holdings.
How King Protocol Works
- Pooled Rewards Vault: King Protocol functions as a central vault where various Liquid Restaking Token (LRT) projects can deposit the diverse restaking network protocol rewards they receive.
- Issuance of Vault Share Tokens: Instead of distributing many small, fragmented reward tokens directly to their stakers, LRT projects can deposit these rewards into the King Protocol vault. In return, King Protocol issues vault share tokens to the LRT projects' stakers (or their distributor contracts).
- Streamlined Rewards Process: This system achieves the following:
- Reduced Transaction Costs: By pooling rewards and issuing a single share token, it significantly cuts down on the individual transaction costs associated with claiming and managing numerous small reward token amounts.
- Simplified Management: It's much easier for stakers, particularly those with smaller stakes, to manage and trade a single, unified share token rather than a multitude of different reward tokens.
- Potential Arbitrage: Larger stakeholders can redeem their share tokens for the underlying pooled rewards. This creates a potential arbitrage opportunity, which helps to drive and stabilize the market price of the King governance token.
