Restaking

Pryzm allows you to restake Liquidiy Provider (LP) tokens, which are collateralised themselves by LSTs, similar to Eigenlayer. By restaking these LP positions on the Przym blockchain, you essentially engage in a secondary layer of yield generation.

This restaking process contributes to the security and operability of the Pryzm network, similar to how staking works in other Proof of Stake or Delegated Proof of Stake systems. However, in addition to contributing to network security, restaking in Pryzm uniquely positions your LPs to earn further rewards. Restaking rewards come from two main sources:

Pryzm Block Rewards: Similar to block rewards in traditional PoS systems, Pryzm generates block rewards that are distributed to participants who help secure the network by staking (in this case, restaking LP positions).

Chain Revenue: Pryzm generates revenue through various mechanisms like trading fees on dApps built on it. A portion of this revenue is allocated to restakers, providing an additional layer of yield on top of the standard LP fees and LST yields.

The allocation of rewards and the decision on which assets can be restaked are governed by Pryzm's integration of The Alliance Module. This module acts as a decentralized governance framework that allows token holders to participate in the decision-making process. The Alliance Module creates a dynamic marketplace where different assets compete for the attention and support of Pryzm governance token holders so they can earn a share of chain inflation and chain revenue. This is based on the perceived value and utility that different assets bring to the Pryzm ecosystem. Assets that are deemed more valuable or have a higher utility in securing the network or attracting liquidity may be allocated higher rewards. This is similar to the “governance wars” concept on most DeFi protocols where different protocols compete for governance tokens to influence the allocation of rewards.