What is restaking—and how to make money from it?

What is restaking?

Restaking is the ability to reuse ETH from Ethereum’s mainnet or from liquid staking pools as wrapped tokens on platforms that implement the EigenLayer protocol. The resulting assets can be deployed to help secure third‑party networks beyond the EVM.

In April 2023 Ethereum’s developers activated the Shapella upgrade, which included several changes at the network’s consensus layer. The most important was enabling withdrawals of staked coins from the Beacon Chain deposit contract, unleashing liquidity onto the market. Once Proof-of-Stake had matured into a clearer and relatively safe model, staking began to provide passive income on a par with PoW mining. The Shapella hard fork also lifted a number of architectural constraints, laying the groundwork for new directions—one of which is restaking.

How does it differ from ordinary staking?

In ordinary staking, a user locks tokens in a pool and earns yield for maintaining the network’s operation and security. The coins are typically inaccessible to the depositor for the term specified in the smart contract—much like a bank deposit.

With restaking, tokens can be redeployed into other pools—including after liquid staking. This enables additional income and participation in other DeFi projects.

The concept resembles merged PoW mining, where, thanks to compatible algorithms, a miner can mine two or more cryptocurrencies at once without lowering aggregate hashrate. In PoS blockchains, this translates into the ability to redeploy staked coins.

How does restaking work on EigenLayer?

EigenLayer offers two ways to participate in restaking with different assets:

• Solo staking. Provide protocol‑verification services or delegate operations to other operators while remaining an Ethereum validator;
• Trust model. Choose a trusted operator for authorisation. If the operator breaches the agreement, it is slashed.

Since launch on mainnet, the team has gradually expanded pool capacity. If in the first phase it admitted LST equivalent to 9,600 ETH, the second brought this to 45,000 ETH, then 100,000 ETH. In January 2024, in the most recent expansion, more than 500,000 ETH were added.

Community members can select pools by voting with tokens—one vote per 1 ETH. The smart contract pauses deposits once a pool hits its staked‑funds cap, resuming only after capacity is expanded. Each subsequent opening is announced in advance via its account on X.

Initially the protocol supported only three liquid restaking pools and only for users of Lido Finance (stETH), Rocket Pool (rETH) and Coinbase (cbETH). Following a vote in late 2023, a sufficient number of pools with current LSTs were added, including:

• wBETH (Binance);
• osETH (Stakewise);
• swETH (Swell);
• AnkrETH (Ankr);
• EthX (Stader);
• oETH (Origin ETH).

Based on analytical data, most activity takes place on liquid‑staking platforms—over $32bn in TVL, or nearly half of total TVL. According to DefiLlama, since June 2023 EigenLayer’s TVL has grown from $13.3m to $1.7bn by early 2024.

What is AVS in restaking?

Thousands of dapps have been built atop Ethereum, and the decentralised ecosystem is growing exponentially. Yet not all of them benefit from the security and trust of the main L1. The chief difficulty lies in writing bespoke cryptographic‑security code for each new dapp, and in the resources lost to maintain trust levels and the time needed to prepare AVS (Actively Validated Services).

AVS are used in any system that applies a set of distributed semantics to protect networks. This includes sidechains, data‑availability (DA) layers, new virtual machines, keeper networks and oracles, cross-chain bridges and various L2 solutions.

On EigenLayer, restakers can earn additional yield and choose how to deploy their funds to support different AVS. The protocol team calls this approach free market governance.

One of the first AVS on EigenLayer was EigenDA. The layer lets Ethereum make data more accessible without violating security requirements. EigenDA also provides rollups with efficient, high‑throughput data transmission.

What are data‑availability layers for?

“Data availability” denotes the assurance that block producers publish all transaction data for a block and make it accessible to all network participants. This means all nodes can download the data present in every block. A node automatically checks availability, confirming that a block’s data were indeed published.

Data‑availability layers come in two types: those residing directly on‑chain and those operating outside the blockchain.

Broadly, EigenDA aims to show that Ethereum’s stakers and validators can support critical infrastructure in addition to consensus, and that AVS and users can succeed by leveraging tokens on top of the network.

At this stage EigenDA can reach throughput of up to 15 MB/s, several times higher than Ethereum’s current capacity. The team believes it could reach 1 GB/s in future.

What are the protocol’s chief advantages?

The EigenLayer protocol offers clear benefits:

• the ability to raise economic security by adding new AVS that reuse Ethereum’s existing validators;
• an increase in the financial value of all participating networks;
• the costs of enhancing Ethereum’s security are balanced across multiple AVS;
• higher costs for potential attacks as the trust system becomes more global.

What are EigenLayer’s drawbacks?

The protocol’s drawbacks include:

• a single point of failure. If EigenLayer is attacked while a significant amount of ETH is staked through it, the main network could be put at risk;
• centralisation risk. If the security of one application is provided by many stakers and they are slashed, this may have negative consequences for Ethereum.
• yield risk. Protocols use Ethereum to secure themselves. However, EigenLayer stakers may chase the highest returns to maximise profits, potentially sparking a race for capital among protocols.
• slashing‑policy risk. Protocols may change terms, lowering penalties to attract more capital and thereby undermining their own security.