If you have been following the Ethereum ecosystem in 2024, you have probably heard the term “restaking” mentioned alongside EigenLayer. With Ethereum trading at $2,974 and the total value locked in restaking protocols growing rapidly, understanding this concept has become essential for anyone involved in proof-of-stake networks. This guide breaks down what restaking is, why it matters, and how you can get started — even if you are completely new to the concept.
The Basics
To understand restaking, you first need to understand regular staking. When you stake Ethereum, you lock up 32 ETH to become a validator on the network, or you delegate a smaller amount to a staking service. In return, you earn rewards for helping secure the blockchain. Think of it like putting money in a savings account — your capital is put to work, and you earn interest.
Restaking takes this concept a step further. Instead of your staked ETH only securing the Ethereum network, it can simultaneously be used to secure other protocols and applications built on top of Ethereum. EigenLayer, developed by a team led by former University of Washington professor Sreeram Kannan, is the first protocol to make this possible on Ethereum. It allows staked ETH to opt in to additional security commitments for other networks, earning extra rewards in the process.
The key insight is that Ethereum’s validator set represents an enormous pool of economic security — billions of dollars worth of staked ETH. Most of this security is currently dedicated solely to the Ethereum base layer. EigenLayer asks: what if we could reuse some of that security to protect other protocols that need it?
Why It Matters
Restaking matters for several reasons. For individual stakers, it offers the potential to earn additional yield on top of their base Ethereum staking rewards. In a market where ETH trades at $2,974 and staking yields hover around 3-4%, any additional income stream is valuable.
For the broader ecosystem, restaking solves a critical bootstrapping problem. New protocols and networks often struggle to attract enough staked capital to achieve meaningful security. By tapping into Ethereum’s existing validator set through EigenLayer, these protocols can inherit battle-tested security from day one, rather than having to build their own trust network from scratch.
However, restaking is not without risks. By committing your staked ETH to secure additional protocols, you expose yourself to additional slashing conditions — meaning you could lose some of your stake if the protocols you are restaking on experience issues. Understanding these risks is crucial before participating.
Getting Started Guide
The most common way to start restaking is through a staking platform like Figment, which published a comprehensive step-by-step guide on May 8, 2024. Here is the basic process for native restaking on EigenLayer:
Step 1: Stake your ETH. You need to already be staking ETH, either by running your own validator or through a staking service. Native restaking requires you to set the withdrawal credentials of your validator to an EigenPod — a special smart contract that EigenLayer creates for you.
Step 2: Create an EigenPod. Using a compatible interface like the Figment staking app, you can deploy an EigenPod smart contract associated with your wallet address. This acts as the bridge between your staked ETH and the EigenLayer ecosystem.
Step 3: Deposit to a validator. Once your EigenPod is set up, you deposit your ETH (in increments of 32 ETH) to activate a validator. The withdrawal address for this validator is automatically set to your EigenPod.
Step 4: Delegate to an operator. Finally, you delegate your restaked ETH to an EigenLayer operator — a node runner who manages the technical process of securing additional protocols on your behalf. Operators like Figment handle the complexity while you earn additional rewards.
For those who prefer not to manage 32 ETH minimums, liquid restaking tokens like those offered by EtherFi, Puffer Finance, and Renzo provide exposure to EigenLayer with much lower minimums and simplified user experiences.
Common Pitfalls
The biggest mistake newcomers make is underestimating the complexity of native restaking. Setting up an EigenPod, managing validator withdrawals, and choosing operators require a solid understanding of Ethereum’s staking mechanics. If you are not comfortable running a validator, liquid restaking alternatives are generally the safer starting point.
Another common error is focusing exclusively on potential yields without considering the corresponding risks. Each additional protocol you restake to introduces new slashing risks. Diversifying across too many protocols without understanding each one’s specific risk profile can lead to concentrated risk exposure rather than true diversification.
Finally, tax implications of restaking rewards vary significantly by jurisdiction. The additional tokens earned through restaking may be taxable as income at fair market value at the time of receipt. Consult with a tax professional who understands cryptocurrency regulations in your country before proceeding.
Next Steps
If restaking sounds right for you, start by exploring the EigenLayer documentation and familiarizing yourself with the ecosystem of operators and actively validated services (AVSs). Begin with a small allocation to understand the mechanics before committing larger amounts. Monitor community channels and official EigenLayer communications for updates on new features, supported protocols, and any security advisories. As the restaking ecosystem continues to mature throughout 2024, staying informed is your best strategy for maximizing returns while managing risk.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research before making investment decisions.
restaking TVL numbers are the most recycled metric in defi. same ETH counted as staked, then LST, then restaked, then AVS security. its leverage dressed up as innovation
avs_burn_ the cascade risk is what keeps me up. one buggy AVS with weak slashing caps and suddenly your LST depegs and lending protocols start liquidating
restaking sounds great until you realize one slashing event on an avs can cascade across multiple protocols
eigenlayer is basically selling the same security twice and calling it innovation. change my mind
been restaking since the mainnet launch. rewards are real but so is the risk. dont ape more than you can lose
its not selling the same security twice. its extending ethereum economic security to new protocols. the risk is real but your framing is off
cascade risk is real but eigenlayer caps slashing at varying amounts per avs. not every slashing event touches your full eth stake
32 eth to validate but you can restake any amount through lido or rocket pool. article barely mentions the liquid staking angle
gas_wren_ liquid staking angle is the real onboarding path. nobody is spinning up 32 ETH solo anymore. Lido and Rocket Pool made restaking accessible to anyone with 0.1 ETH
32 ETH to be a validator and then restaking on top for extra yield sounds great until you realize the slashing risk stacks. one bug in an AVS and your stake is gone
restaking_skep the slashing caps vary per AVS but the cascade risk is still undersold. one buggy AVS with weak correlation to others can still wipe 30% of your stake in a single event
slash_shield_ 30% of stake gone from one buggy AVS is the cascade scenario nobody prices in. everyone assumes slashing caps will hold until they dont
slash_shield_ the cascade risk is undersold. one buggy AVS with weak slashing caps can still wipe 30 percent of your stake in a single event. not theoretical anymore
Sander V. the cascade risk is the one thing nobody in restaking wants to acknowledge. one buggy AVS slashes 30 percent and suddenly every LST-backed loan on Aave underwater
restaking_skep slashing risk stacking is the real issue. one buggy AVS takes 30 percent and your LST depegs triggering liquidations across lending protocols
sreeram kannan built something genuinely novel but the TVL numbers are misleading. most of it is restaked LSTs not fresh ETH
Minji P. exactly. TVL numbers count restaked LSTs as fresh capital when its the same ETH recycled. real new security is maybe 20% of the headline number
Minji P. the TVL numbers count restaked LSTs as fresh capital. its the same ETH recycled through Lido then EigenLayer. real new security is maybe 20 percent of headline
Minji P. TVL counting restaked LSTs as fresh capital is the most misleading metric in DeFi. real security budget is maybe 20 percent of headline
sreeram kannan building this on peer-reviewed academic research instead of vibes is why eigenlayer has traction. most restaking clones are copy paste jobs
the article glosses over how AVS selection actually works. you are opt-in per service and each one has different risk parameters. its not set and forget, its active risk management
Sreeram Kannan building on peer reviewed research instead of vibes is why EigenLayer got traction. every restaking clone since is a copy paste job with worse security
sreeram built this on actual peer reviewed research not a whiteboard. thats why eigenlayer has traction while every restaking clone is a ghost town
EigenLayer TVL counts the same ETH twice. stake with Lido, restake with Eigen, deposit the LST into Aave. that is not 15B in new security, that is 5B recycled three times