Crypto's Hidden Yield: The Rise of Restaking

Restaking in the crypto world refers to the practice of taking already staked ether and committing it to secure other protocols, earning extra yield along with increased risk.

The concept was introduced by EigenLayer in 2023 and has grown into one of the largest systems in decentralized finance, with tens of billions of dollars committed to it by 2026.

Restaking collapses the problem of bootstrapping trust for new blockchain services. Instead of building their own security pools, these services draw on a shared pool made up of restaked ether.

The leading protocols in liquid restaking are ether.fi and Renzo with eETH and ezETH tokens respectively. These tokens represent your restaked position and quietly accrue the layered yield.

However, restaking comes with real risks including slashing exposure, smart contract vulnerabilities, and concentration risk. The mechanism that ties it together is slashing, which can result in penalties for misbehavior or delegation to an operator who does.