Restaking

What Is Restaking?

Restaking is the practice of taking assets that are already staked on a proof-of-stake blockchain and committing them to secure additional protocols or services. Rather than capital sitting idle after securing a single chain, restaking extends that economic guarantee to other systems that need validator-backed security but lack the resources to bootstrap their own validator set from scratch.

The concept emerged from a simple observation: Ethereum's staked ETH (worth tens of billions of dollars) represents one of the largest pools of cryptoeconomic security ever assembled. New protocols that need security guarantees, such as oracle networks, data availability layers, and cross-chain bridges, traditionally had to attract their own stakers and build trust from zero. Restaking lets these services borrow security from Ethereum's existing validator set, accelerating their launch while giving stakers a way to earn additional yield.

EigenLayer, launched on Ethereum mainnet in 2023, pioneered the restaking model and remains the dominant protocol in the space. The concept has since expanded to other ecosystems, with Babylon bringing restaking to Bitcoin and protocols like Symbiotic and Karak offering alternative implementations on Ethereum.

How It Works

Restaking builds on the mechanics of proof-of-stake validation. In a standard PoS system, validators lock up capital as collateral and risk losing it (slashing) if they behave dishonestly. Restaking extends this model by letting that same collateral serve as a security deposit for multiple services simultaneously.

The EigenLayer Model

EigenLayer operates as a set of smart contracts on Ethereum that create a marketplace between three participants:

1. Restakers deposit ETH or liquid staking tokens (LSTs like stETH or rETH) into EigenLayer contracts, opting in to additional slashing conditions beyond base Ethereum staking
2. Operators register with EigenLayer and run the node software required by each AVS they choose to validate. Restakers delegate their stake to operators they trust
3. Actively Validated Services (AVSs) are the protocols that consume restaked security. Each AVS defines its own validation logic, reward structure, and slashing conditions

When a restaker deposits into EigenLayer, their ETH continues to secure Ethereum as normal. The EigenLayer contracts additionally grant slashing rights to each AVS the restaker opts into. If the operator misbehaves while validating an AVS, that AVS can slash a portion of the restaker's deposit. If they perform honestly, they earn rewards from both Ethereum staking and each AVS they support.

Types of Restaking

EigenLayer supports two primary restaking methods:

• Native restaking: validators point their Ethereum withdrawal credentials to EigenLayer's contracts, restaking their full 32 ETH validator stake. This approach provides the deepest integration but requires running a full Ethereum validator
• LST restaking: users deposit liquid staking tokens (like Lido's stETH or Rocket Pool's rETH) into EigenLayer. This is more accessible since it requires no minimum stake and no validator infrastructure

Actively Validated Services (AVSs)

AVSs are the demand side of the restaking marketplace. Any service that requires a distributed set of operators with economic skin in the game can launch as an AVS. Prominent examples include:

• EigenDA: a data availability layer that stores transaction data for rollups, secured by restaked ETH rather than building its own validator set
• Oracle and coprocessor networks: off-chain computation services that need verifiable, slashable guarantees on their outputs
• Cross-chain bridges and interoperability protocols: message verification systems that rely on restaked collateral to guarantee honesty
• Shared sequencers: transaction ordering services for Layer 2 rollups that need liveness and fairness guarantees

Delegation Flow

A typical restaking flow works as follows:

1. Restaker deposits ETH or LST into EigenLayer contracts
2. Restaker delegates to a registered Operator
3. Operator selects which AVSs to validate
4. Operator runs AVS-specific node software
5. AVS rewards flow back to Operator → split with Restaker
6. If Operator misbehaves → AVS triggers slashing on shared collateral

The key difference from standard staking: each additional AVS increases both yield and slashing exposure. The operator's reputation and operational quality directly affect restaker risk.

Liquid Restaking Tokens

Just as liquid staking protocols issue tokens representing staked ETH (LSTs), liquid restaking protocols issue tokens representing restaked positions. These liquid restaking tokens (LRTs) let users participate in restaking while maintaining capital composability across DeFi.

Major LRT protocols include:

• Ether.fi (eETH): the largest LRT issuer by TVL, handling billions in restaked deposits and commanding over 60% of the LRT market
• Renzo (ezETH): a multi-chain LRT protocol supporting restaking on Ethereum and Solana
• Puffer (pufETH): focused on lowering the barrier for native restaking by enabling sub-32 ETH participation
• Kelp DAO (rsETH): an LRT aggregator that pools deposits across multiple operators and AVSs

LRTs typically capture combined yields from three sources: base Ethereum staking rewards, AVS restaking rewards, and any additional DeFi yield from deploying the LRT itself as collateral. Combined yields have typically ranged from 8% to 12% APY, though they fluctuate with AVS demand and market conditions.

Restaking Beyond Ethereum

Babylon: Bitcoin Restaking

Babylon brings restaking to Bitcoin, allowing BTC holders to stake their coins to secure external proof-of-stake chains without wrapping or bridging their Bitcoin. Babylon uses Bitcoin's native scripting capabilities (timelocks and cryptographic covenants) to implement slashing directly on the Bitcoin base layer.

By late 2025, Babylon had attracted over 56,000 BTC in restaked deposits (worth approximately $6.2 billion), making it one of the largest Bitcoin DeFi protocols by value locked. For a deeper analysis, see the Bitcoin restaking research article.

Competing Protocols

Several alternative restaking protocols have emerged alongside EigenLayer:

• Symbiotic: a permissionless restaking framework that supports a broader set of ERC-20 collateral types beyond ETH and LSTs. It runs a thin, immutable coordination layer that any network can plug into
• Karak: a multi-asset restaking protocol that refers to its secured services as Distributed Secure Services (DSS). Karak supports collateral from multiple chains and asset types, offering diversified security backing

Despite competition, EigenLayer has maintained dominant market share in the Ethereum restaking ecosystem, accounting for over 90% of total restaked value as of early 2026.

Use Cases

Restaking addresses a fundamental bootstrapping problem in decentralized systems: how does a new protocol acquire enough economic security to be trustworthy?

• Bootstrapping security for new protocols: rather than spending months or years attracting validators and building a token with sufficient market cap, new services can launch with Ethereum-grade security from day one by becoming an AVS
• Capital efficiency: stakers earn yield from multiple sources without needing additional capital. The same ETH secures Ethereum, a data availability layer, an oracle network, and a bridge simultaneously
• Modular blockchain infrastructure: restaking enables the modular blockchain thesis by letting specialized services (sequencing, DA, proving) access shared security pools rather than building monolithic chains
• Reducing fragmentation: instead of dozens of small validator sets with limited economic security, restaking concentrates security in a shared pool that multiple services draw from

Risks and Considerations

Cascading Slashing

The most cited systemic concern with restaking is cascading slashing. When the same collateral secures multiple services, a slashing event on one AVS reduces the total security available to all other AVSs sharing that collateral. If a major operator is slashed, the resulting loss of collateral could trigger a confidence crisis across every service that operator validated.

This dynamic mirrors traditional finance concerns around rehypothecation: the same asset is pledged as security in multiple places, and a single failure can propagate through the system. Researchers have compared the potential contagion pathways to the cascading failures seen during the UST/LUNA collapse in 2022.

Concentration Risk

The restaking market is heavily concentrated. EigenLayer commands over 90% of Ethereum restaking TVL, and within the LRT market, Ether.fi's eETH holds over 60% of total LRT supply. This concentration creates single points of failure: a smart contract vulnerability in EigenLayer or a major LRT protocol could affect the majority of all restaked capital.

Compounded Smart Contract Risk

Restaking stacks multiple layers of smart contract risk. A restaker using an LRT is exposed to: the base Ethereum staking contract, the liquid staking protocol (e.g., Lido), the EigenLayer contracts, the LRT protocol's contracts, and each AVS's slashing logic. A bug in any layer can result in loss of funds.

Operator Risk

Restakers must trust their chosen operator to correctly run validation software for every AVS they opt into. An operator running too many AVSs may stretch their operational capacity, increasing the chance of downtime or misconfiguration that triggers slashing. Unlike base Ethereum staking where slashing conditions are well understood, each AVS defines its own slashing rules, creating a complex risk surface.

LRT Depeg and Liquidity Risk

Liquid restaking tokens can trade below their underlying value (depeg) during market stress, especially if large holders rush to exit. When LRTs are used as collateral in lending protocols, a depeg can trigger liquidation cascades where forced selling amplifies the price decline.

Why It Matters

Restaking represents one of the most significant shifts in how decentralized protocols acquire security. By creating a shared security marketplace, it lowers the barrier for new services to launch with meaningful economic guarantees while improving capital efficiency for stakers. The Ethereum restaking market alone has attracted billions in deposits, and the model is expanding to Bitcoin through Babylon and to other ecosystems.

However, the rapid growth of restaking has outpaced the development of risk frameworks to manage it. The interconnection of shared collateral across dozens of services creates novel systemic risks that the crypto ecosystem is still learning to evaluate. For stakers considering restaking, the additional yield must be weighed against compounded slashing exposure, smart contract risk, and the operational quality of their chosen operators.

For those interested in how Bitcoin approaches similar concepts through native scripting rather than smart contracts, see the Bitcoin restaking deep dive. For background on how base-layer staking and proof-of-stake consensus work, see the staking and proof-of-stake glossary entries.

This glossary entry is for informational purposes only and does not constitute financial or investment advice. Always do your own research before using any protocol or technology.