Author: Mia, ChainCatcher

Editor: Marco, ChainCatcher

With the official release of the 53rd new coin mining project by Binance, the liquidity re-staking protocol Renzo (REZ) has quickly become the focus of the crypto community. The expected listing on Binance was supposed to bring huge benefits to Renzo, but the actual situation turned out to be unexpected. The anticipated surge in TVL did not materialize after the listing announcement, and instead, news about the detachment of the Renzo derivative token ezETH flooded the market. Within 24 hours of the listing announcement, ezETH briefly detached, with prices plummeting to a low of $2262, leading to the unfortunate liquidation of some users.

This sudden detachment event unexpectedly allowed some users to take advantage of the situation. A sharp-eyed whale seized the opportunity and purchased 2499 ezETH worth $6.98 million with 2400 ETH, netting a profit of 99 ETH. At the same time, an account associated with wallet address 0xaa1 (czsamsunsb.eth related) also earned 193 ETH, equivalent to around $600,000.

This event quickly sparked widespread attention and questions from the crypto community: "It was supposed to be positive, so how did it suddenly turn negative?" So, what exactly did Renzo go through after the listing announcement?

Coincidental Timing

According to relevant data, the detachment of ezETH was detected at 11:17 on April 24, just 17 hours after Binance announced the liquidity re-staking protocol Renzo (REZ) new coin mining. What happened within these 17 hours that led to the detachment of ezETH? The answer lies in Renzo's release of the REZ token economic model and sharing of airdrop details, which caused significant dissatisfaction within the crypto community.

Token Economics Trigger Community Dissatisfaction

In the disclosed token economics, only 5% and 2.5% were allocated to the first season airdrop for ezPoints activities and launchpool shares, respectively. Furthermore, according to the airdrop rules, the top 5% of addresses will immediately unlock 50% of the tokens at TGE, with the remaining portion gradually released over the next 6 months. This design implies that at TGE, the majority of liquidity is still effectively controlled by the project team.

This fact raised doubts among some investors, who expressed skepticism about the project's claim of "decentralization" and believed that it contradicted actual operations. Some even stated that while the project advocates decentralization, it only airdropped 5% of the token supply, which seems absurd; a high 70% of the token supply remains in the hands of internal personnel, indicating that the so-called decentralization has not been achieved.

This dissatisfaction quickly spread within the community, and discussions about the "Renzo (REZ) token economics" continued to ferment, becoming the main catalyst for the detachment of ezETH. Some users believed that Binance stakers using Launchpool would have the opportunity to sell their tokens before the ezETH airdrop unlock, leading to some ezETH stakers selling off their tokens. Some stakers hoped to sell ezETH and use ETH to participate in other liquidity re-staking project tokens.

Some users on X pointed out that Renzo used an unevenly proportioned pie chart to describe the token distribution, causing confusion about where the REZ tokens were flowing. After resizing, the pie chart actually showed that over 60% of the tokens flowed to the team, investors, and advisors.

Additionally, the airdrop rules indicated that 2% of the first season's 5% airdrop (equivalent to 0.1% of the total token supply) had been allocated to NFT communities such as Milady Maker and SchizoPosters, which seemed unrelated to the Renzo protocol itself, raising concerns among users about insider trading.

Looping "Death Spiral"

In fact, the previous Renzo airdrop reward activity involved a "looping" leverage strategy, where airdropped Farmers could sell ezETH for ETH, then re-deposit the ETH into the protocol to accumulate more rewards, leading to users exiting by selling large amounts of ezETH.

The thin on-chain liquidity was unable to withstand the selling pressure and exacerbated the large-scale sell-off of ezETH, causing a significant drop in token value. This also led to numerous liquidations in the lending markets, with individuals holding leveraged positions in ezETH suffering losses exceeding $50 million.

Renzo Adjusts Airdrop Rules in Response to the Community

The detachment of the ezETH token caught the attention of the Renzo project team. In response to community doubts, the project team quickly clarified that airdrop eligibility depends on ezPoints at the time of the snapshot, regardless of ezETH balances at the time of the snapshot (whether sold or not). Users with expiring Pendle YT before the snapshot only need to meet the minimum standard to qualify for the airdrop. NFT airdrops will be calculated based on NFT quantity, not wallet quantity. However, this response did not alleviate the community's concerns, and ezETH remains in a "detached" state.

Upon realizing that the root of the problem lay in the token economics and airdrop details, the Renzo project team made a series of corresponding adjustments to stabilize community sentiment and salvage the coin price.

To address user dissatisfaction with the token economics details, the project team increased the first season airdrop allocation ratio from 5% of the tokens to 7%. Renzo raised the airdrop quantity to 12% of the total supply of 10 billion tokens, with 7% of the tokens to be distributed in the first phase (scheduled for the end of the month) and 5% in subsequent phases. Additionally, the receiving date for the first airdrop has been updated to April 30.

Under the new airdrop criteria, participants with 360 or more Renzo points are eligible for the airdrop, and they can receive the airdrop proportionally based on points in the token generation event. Previously, the top 5% of qualifying wallets would receive half of the airdrop over the next six months. In the new update, 99% of qualifying airdrop addresses can fully unlock after TGE, and wallets with over 500,000 ezPoints will unlock 50% at TGE, with the remaining portion linearly vested over 3 months.

Additionally, the project team canceled the previous "looping" leverage strategy to maintain the liquidity of ezETH.

According to CoinGecko market data, ezETH is currently priced in the range of $3056-$3121 on various platforms. Although it is still in a "detached" state, the price is steadily rebounding, and the discount to ETH is narrowing.

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