Restaking is the practice of using already-staked cryptocurrency (like staked ETH) to provide security for additional protocols — earning extra yield on top of base staking rewards. EigenLayer pioneered this concept, creating a marketplace where Ethereum's $100B+ in staked security can be 'rented' by other protocols. Instead of every new protocol bootstrapping its own validator set, they can tap into Ethereum's existing security through restaking — fundamentally changing how blockchain security is provisioned.
EigenLayer sits between Ethereum's staking layer and Actively Validated Services (AVSs) — protocols that need economic security. Restakers deposit liquid staking tokens (stETH, rETH) into EigenLayer and opt into securing specific AVSs — bridges, oracles, data availability layers, sequencers, and more. In exchange, they earn additional yield from AVS fees on top of their base ETH staking rewards. The catch: restaked assets face additional slashing risk if the AVS they're securing is compromised.
Just as Lido created liquid staking for ETH, protocols like EtherFi (eETH), Renzo (ezETH), Puffer (pufETH), and Kelp (rsETH) have created liquid restaking tokens. These LRTs let you earn ETH staking rewards + EigenLayer restaking rewards + LRT protocol incentives — triple-layered yield. However, each additional layer adds smart contract risk. The liquid restaking sector grew to over $15B in TVL, demonstrating massive market demand for yield optimization on staked ETH.
Restaking introduces systemic risk: if a major AVS is exploited and slashes restaked ETH, the cascade could impact the entire Ethereum staking ecosystem. Critics argue restaking creates rehypothecation risk similar to traditional finance — the same capital being used to secure multiple systems simultaneously. Additionally, the economics of AVS rewards are still nascent — most restaking yield currently comes from point programs and token expectations rather than sustainable fee revenue. The long-term viability depends on AVSs generating enough revenue to justify the restaked security.
EigenLayer enables Ethereum validators to opt into securing additional networks ('Actively Validated Services' or AVSs) using their existing staked ETH. Validators sign up for AVSs and accept the additional slashing conditions specific to each. AVSs pay rewards in their own tokens (or ETH) for the additional security service. The system creates a market for security: networks that need decentralized validation can rent it from Ethereum's existing validator set, paying market rates rather than bootstrapping their own validator economics. Major AVSs include EigenDA (data availability), AltLayer (rollup-as-a-service), Lagrange (ZK proof aggregation), and many more. As of 2026, EigenLayer secures tens of billions in TVL.
Just as liquid staking unlocked staked ETH for DeFi, liquid restaking does the same for restaked ETH. Protocols like Ether.fi (eETH), Renzo (ezETH), Puffer Finance (pufETH), and Kelp DAO (rsETH) deposit user ETH into EigenLayer and issue tradeable tokens representing the restaked position. Holders earn base ETH staking yield + restaking yield from AVSs without managing the underlying complexity. LRTs themselves can then be deposited in DeFi for additional yield. The total yield can reach 8-15% annualized — base staking, restaking rewards, points programs, and DeFi composability stacked. The risks compound proportionally: smart contract risk × multiple operators × multiple AVSs each with separate slashing conditions × DeFi protocol risk.
Restaking introduces novel risks that don't exist in simple staking. Slashing risk multiplies — your stake can be slashed by Ethereum, by EigenLayer, or by individual AVSs you've opted into. AVS quality varies dramatically; early AVSs may have undiscovered bugs. Operator risk is significant — different operators run different AVSs with different competency levels. Correlated slashing could affect many users simultaneously if a popular operator misbehaves. Centralization risk emerges as economies of scale favor larger operators. Yield sustainability is uncertain — current high yields rely on token incentive emissions which may not persist. Most importantly, the system is new — multi-year operating history doesn't exist yet, and unknown failure modes are likely.
Restaking offers higher yield (typically 5-10% combined vs 3-5% for simple staking) but with higher complexity and risk. For users comfortable with DeFi and able to monitor positions, allocating a portion to restaking makes sense. For passive users or those new to staking, simple liquid staking through Lido or Rocket Pool is a better starting point. Don't restake everything — diversification across staking strategies reduces single-point-of-failure risk.
Each major LRT has different operator selection criteria and AVS allocation strategies. Ether.fi has the most TVL and broadest AVS exposure. Renzo has strong DeFi integration. Puffer focuses on operator decentralization. Kelp emphasizes simplicity. Look at: which AVSs they secure (diversified is safer than concentrated), operator reputation, contract audits, and community trust. Many users hold multiple LRTs to diversify.
Yes, in several ways. Slashing events (rare but possible) reduce stake. AVS failures could damage operators and propagate. Smart contract exploits in EigenLayer or LRTs could cause losses. ETH price volatility affects USD value. The combination has caused some users to label restaking 'staking with extra steps' — accurate insofar as the additional yield carries proportional additional risk. Size positions accordingly.