Restaking

Restaking is reusing coins that are already staked, usually ETH, to secure other services for extra rewards. In return, the risk of losing part of the stake for misbehaviour grows.

How it works

Staked ETH secures Ethereum: if a validator breaks the rules, some of its coins are taken away. Restaking offers the same stake as a guarantee to other systems too, such as oracles, bridges and data networks. They pay for that security with their own rewards.

You deposit ETH or a liquid staking token into a restaking protocol and choose operators who will run those services. Often you get yet another receipt token (an LRT) that can also be used in DeFi.

Each layer adds risk: Ethereum and any connected service can impose penalties, and every level adds more smart contracts. In the early years of restaking, much of the yield came as "points" and possible future airdrops rather than guaranteed payouts.

Example with numbers

You stake 5 ETH and earn about 3% a year, 0.15 ETH. Restaking adds, say, 1.5%, another 0.075 ETH. But if your operator breaks a connected service's rules and it slashes 10% of the stake, you lose 0.5 ETH, which wipes out almost seven years of the extra yield.

Common mistake

A common mistake is treating restaking as a free bonus on top of staking. The extra reward is payment for extra risk. Learn which services your stake secures, their penalty rules and how fast you can exit, and do not stack leverage on top.

Questions and answers

What is restaking in simple terms?

It is pledging coins that are already staked as security for other services too. Those services pay an extra reward for it.

Why is restaking riskier than staking?

Several systems can penalise the same stake, and new smart contracts are added. Losing part of your stake becomes more likely.

What is an LRT?

It is a liquid restaking token, a receipt for your restaked position. You can sell it or use it in DeFi, but its price can drift from ETH.

Restaking

How it works

Questions and answers

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