TLDR:

• Supply and demand is key to success in the crypto industry, influencing everything from the security of Bitcoin & Ethereum to the success of restaking

• Economic security is frequently wasted and can be put to use more efficiently by doing double duty via restaking

• Kernel has strong demand for its shared economic security, which translates to a promising future for the protocol

• The KERNEL token is about to launch and will form a key part of KernelDAO, conferring governance rights & an opportunity to earn restaking rewards

The entire crypto industry lives and dies by the economic model of supply and demand. When people ask what crypto assets are “backed” by, this is one of the most fundamental answers. In the case of Proof of Work assets like Bitcoin, a drop in demand results in lower prices and reduced transaction fees, with mining becoming unprofitable and hashrate dropping even as supply continues to increase, depressing prices further and leaving the network weakened and vulnerable to attack. Proof of Stake (PoS) networks like Ethereum are even easier to visualise, with the value of staked assets dropping directly correlating to lowered defences.

In reality, the industry is far too mature for this threat to be realised, even if asset prices do collapse from current levels. To attack Bitcoin and Ethereum today would cost many billions of dollars, and it’s probably not even realistically practical to do so. But if you had to start again, how would you get here quickly instead of through many years of expensive, risky, and time-intensive iterative progress? Our two examples of Bitcoin and Ethereum had the fortune of maturing in relative obscurity, with no real external threat to their survival in the early days.

In contrast, a new decentralised oracle or bridge must be fully secure from day one – the alternative is to risk a fatal exploit, if wary users even trust the product to begin with. The answer for many projects is to err on the side of caution and significantly over-pay for economic security. For example, Tezos, an L1 that launched in 2018, has just $40m in TVL and negligible volume, yet is secured by around $600m of staked XTZ tokens which earn around $30m in annual staking emissions.

Enter restaking. This is precisely the problem that this cutting-edge crypto technology was created to solve. Existing L1s like BNB Chain already have a robust PoS security network that provides more than enough defence for the chain itself. The same node hardware and staked assets can then take on additional roles to support new projects building on top of BNB Chain. Kernel is making this happen.

Historically, the excitement around restaking has meant that creating supply of shared economic security via restaked assets has been relatively easy to achieve. We established earlier that, in the long term, lack of real demand for a crypto product or service is perhaps one of the biggest risks to its survival. So to assess the viability of a restaking protocol like Kernel, we can simply look at the demand for the restaked security that it offers.

While Kernel is leading the restaking wave on BNB Chain, it’s still a relatively new endeavour. That’s why the substantial roster of dynamic validator networks (DVNs) - projects lining up to leverage the protocol’s shared economic security - is even more impressive. YieldNest and Stakeease are building liquid restaking products. Catalysis is working on an abstraction layer to aggregate and unify economic security across shared security protocols. There’s multiple other DVNs, including Router, Marlin, Mira, Mishti, KGen, eOracle, Electron Labs, Brevis, and Aizel. These DVNs cover everything from AI to oracles, ZK proofs, bridges, & decentralised computation.

If this wave of demand for Kernel is anything to go by, there’s a bright future ahead! And you can play a direct part in this future, via the KERNEL token, which is coming soon and will form a core part of the Kernel product. Firstly, the token will unlock participation in decision-making processes for these three major products: Kelp LRT, Kernel Infrastructure, and Gain. The governance decisions can include allocating funds, establishing new partnerships, and protocol upgrades. Users will also be able to restake KERNEL to provide shared economic security for the Kernel ecosystem, and earn staking rewards for doing so.

Already demonstrating promising growth, it’s safe to say that the future for the KernelDAO ecosystem and hence the KERNEL token seems very promising indeed. If you’ve been participating in the Kernel DAO ecosystem, you might already be eligible for a KERNEL token airdrop. 60% of the token supply has been allocated for the community, rewards, and ecosystem. One third of this, or a massive 20% of the total KERNEL supply, has been dedicated to airdrops across multiple seasons. Season 1 has been allocated 10% of the total supply, based on a snapshot date on December 31 2024. Otherwise, keep an eye out for listings on your favourite decentralised and centralised exchanges. Restaking is supercharging the entire crypto industry and you can be a part of it with KernelDAO and the KERNEL token!