Restaking is the internet bond. It creates a native, programmable yield curve for crypto-native capital, unlike traditional bonds which are debt instruments tied to fiat monetary policy.
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Why Restaking Represents the True 'Internet Bond'
An analysis of how restaking protocols like EigenLayer transform idle staked ETH into a composable, high-yield asset class, creating the foundational security primitive for the internet.
introduction
THE PRIMITIVE
Introduction
Restaking transforms idle crypto capital into a foundational yield-bearing asset that secures multiple networks simultaneously.
EigenLayer abstracts cryptoeconomic security. It allows protocols like EigenDA, Espresso, and Lagrange to bootstrap trust without launching their own validator set, creating a market for pooled security.
The capital efficiency is non-linear. A single staked ETH can secure Ethereum's consensus while simultaneously securing an AVS, generating yield from multiple sources in one asset.
Evidence: The EigenLayer mainnet has over $15B in TVL, demonstrating massive demand for this new capital asset class from protocols and stakers.
thesis-statement
THE PRIMITIVE
The Core Thesis
Restaking transforms idle crypto capital into a foundational yield-generating asset that secures the entire modular stack.
Restaking is capital efficiency. It allows a single staked ETH position on Ethereum to simultaneously secure multiple Actively Validated Services (AVS) like EigenLayer, EigenDA, or a Cosmos consumer chain. This creates a native yield-bearing asset for decentralized infrastructure, eliminating the need for separate inflationary token emissions for each new network.
The internet bond analogy holds. Traditional bonds finance sovereign debt; restaked ETH finances cryptoeconomic security. The yield represents a risk-adjusted premium for the slashing risk taken by operators, not a coupon from a central issuer. This creates a market-driven security budget for protocols like AltLayer and Lagrange.
Evidence: EigenLayer has over $15B in TVL, demonstrating massive demand to repurpose staked ETH liquidity. This capital is now the security backbone for data availability layers and cross-chain bridges, creating a more efficient security marketplace than fragmented PoS chains.
key-trends
THE INTERNET BOND THESIS
The Market Context: Why Now?
The convergence of modular blockchains, permissionless innovation, and a search for sustainable yield is creating a new crypto-native asset class.
01
The Problem: Modular Chains Need Security, Not Just Validators
Rollups and app-chains require economic security for their consensus, but bootstrapping a decentralized validator set is capital-intensive and slow. This creates a security vs. sovereignty trade-off that stifles innovation.\n- High Cost: Launching a new chain requires billions in token incentives.\n- Fragmented Capital: Security budgets are siloed and inefficient.
$1B+
Typical Security Budget
6-12 mo.
Bootstrapping Time
02
The Solution: EigenLayer & the Restaking Primitive
EigenLayer introduces pooled security as a service. Staked ETH on Ethereum mainnet can be 'restaked' to cryptographically secure other networks (AVSs). This turns idle security into productive capital.\n- Capital Efficiency: $20B+ TVL secures Ethereum and new protocols.\n- Permissionless Innovation: Developers launch AVSs (e.g., Oracles, DA layers) without raising a war chest.
$20B+
TVL
100+
AVSs Secured
03
The Catalyst: The Hunt for Real Yield in a Post-Merge World
Post-merge, native ETH staking yields are stable but modest (~3-5%). The market demands higher risk-adjusted returns. Restaking creates a yield curve for crypto-native risk, attracting capital seeking sustainable, protocol-derived yield.\n- Yield Stacking: Base staking yield + AVS rewards.\n- Risk Markets: Liquid restaking tokens (LRTs) like ether.fi, Renzo create a secondary market for slashing risk.
3-5%
Base Staking APR
10-15%+
Restaking APR Target
04
The Network Effect: A Flywheel for Ethereum's Dominance
Restaking creates a powerful economic moat. More AVSs attract more restaked capital, which increases Ethereum's security budget and makes its crypto-economic security the global standard. This is the 'Internet Bond' thesis: a unified, programmable trust layer.\n- Sticky Capital: Withdrawals are delayed, creating long-term lock-in.\n- Composability: AVSs like AltLayer, Espresso build interconnected services on this base layer.
60%+
ETH Staked
Flywheel
Network Effect
WHY RESTAKING REPRESENTS THE TRUE 'INTERNET BOND'
The Yield Spectrum: Restaking vs. Traditional Assets
A first-principles comparison of yield generation, risk, and composability between native crypto assets and traditional financial instruments.
| Feature / Metric | Native Crypto Restaking (e.g., EigenLayer) | Traditional Sovereign Bond (e.g., US 10Y) | Traditional Money Market Fund (e.g., VMFXX) |
|---|---|---|---|
Underlying Asset | Native Protocol Token (e.g., ETH) | Sovereign Debt Obligation | Short-Term Debt & Repo Agreements |
Primary Yield Source | Cryptoeconomic Security Fees + Consensus Rewards | Sovereign Credit & Inflation Expectations | Central Bank Policy Rate (e.g., Fed Funds) |
Typical Nominal Yield (2024) | 3-6% + AVS Rewards | 4.2% | 5.3% |
Yield Composability | |||
Settlement Finality | < 12 minutes (Ethereum) | T+2 Settlement | T+1 Settlement |
Global 24/7 Access | |||
Counterparty Risk | Smart Contract & Slashing Risk | Sovereign Default Risk | Fund Sponsor & Issuer Risk |
Inflation Hedge Characteristic | Monetary Premium of Native Asset | Negative Correlation (Nominal) | None |
Capital Efficiency (Rehypothecation) | Leveraged Security via Restaking | Not Applicable | Limited (via Repo) |
Minimum Viable Entry |
| $1,000 | $3,000 |
deep-dive
THE CAPITAL STACK
The Mechanics of the Internet Bond
Restaking transforms idle crypto capital into productive, programmable security that underpins the entire decentralized economy.
Restaking is capital rehypothecation. It allows staked ETH on Ethereum to be used as cryptoeconomic security for other protocols like EigenLayer, Babylon, or AltLayer. This creates a unified security layer, eliminating the need for each new chain to bootstrap its own validator set from scratch.
The bond is the slashing condition. The internet bond's yield is not a coupon payment but a fee-for-service, paid by actively validated services (AVSs) in exchange for pooled security. The bond's principal is at risk via slashing if the AVS's operators misbehave, aligning economic security with performance.
Ethereum is the foundational collateral. Unlike fragmented L1s, Ethereum's $100B+ staked ETH provides the deep, liquid, and credibly neutral base layer for this system. This concentration creates a security flywheel where more AVSs attract more restaked capital, increasing the cost of attack for all.
Evidence: EigenLayer has secured over $15B in TVL, demonstrating market demand for pooled security. Protocols like Omni Network and Lagrange use it to secure their data availability and ZK proof layers.
risk-analysis
WHY RESTAKING IS THE TRUE 'INTERNET BOND'
The Bear Case: Systemic Risks of the Internet Bond
The narrative that restaking creates a risk-free 'Internet Bond' is dangerously simplistic. It's a bond that can be slashed, diluted, and correlated in a crisis.
01
The Slashing Avalanche
Restaking creates a daisy chain of slashing risk. A fault in an AVS (Actively Validated Service) like EigenDA or a rollup can cascade back to the Ethereum consensus layer, triggering mass, correlated penalties. This turns a single point of failure into a systemic event.
- Non-Binary Risk: Unlike a traditional bond default, slashing is probabilistic and can be partial.
- Correlated Penalties: A major AVS fault could slash thousands of validators simultaneously, creating a liquidity crisis.
100%+
Correlation Risk
Cascading
Failure Mode
02
The Liquidity Mirage
The 'bond' analogy fails on liquidity. Liquid Restaking Tokens (LRTs) like ether.fi's eETH or Renzo's ezETH promise liquidity but create a fragile derivative layer. In a stress event, the peg breaks, and the underlying staked ETH is illiquid and subject to unbonding delays.
- Derivative Depeg Risk: LRTs can trade at a steep discount during market stress, as seen with stETH in 2022.
- Unbonding Queue: Access to the core 'principal' (staked ETH) is gated by a ~27-day queue, making it a terrible emergency asset.
27 Days
Unbonding Period
High
Depeg Risk
03
Yield Dilution & AVS Bloat
The 'Internet Bond' yield is not guaranteed. It's a function of AVS demand and subsidized inflation. As more AVSs launch and more ETH is restaked, yields per unit of risk will compress. This creates a race to the bottom where operators accept riskier, lower-yield AVSs to maintain returns.
- Yield Compression: More capital chasing finite AVS rewards drives down risk-adjusted returns.
- Security Theater: Low-value AVSs dilute the security budget of Ethereum, creating 'security as a commodity' with no marginal cost.
Compressing
Risk/Reward
$10B+ TVL
Chasing Yield
04
Centralized Points of Failure
The restaking stack introduces new centralization vectors. EigenLayer's multisig, LRT issuer strategies, and dominant AVS operators become critical trust points. A governance failure or exploit at any layer compromises the entire 'bond'.
- Protocol Risk: EigenLayer's upgradeability and operator set are centralized choke points.
- Operator Cartels: A small set of large node operators (like Figment, Coinbase) could dominate AVS validation, defeating decentralization.
Multisig
Upgrade Control
Oligopoly
Operator Risk
future-outlook
THE YIELD PRIMITIVE
Future Outlook: The Internet Bond Market
Restaking is evolving from a niche security primitive into the foundational yield layer for a decentralized internet.
Restaking is the internet bond. It packages the native yield of Ethereum's proof-of-stake security into a tradeable, composable financial asset, creating a universal collateral base for decentralized services.
The market cap is the security budget. Unlike traditional bonds, the value of restaked assets directly funds the security of new protocols like EigenLayer AVSs, AltLayer, and Hyperliquid, creating a flywheel for decentralized infrastructure.
LSTs are the treasury notes. Liquid staking tokens (LSTs) from Lido and Rocket Pool function as the high-liquidity, low-risk tranche of this market, while actively validated services (AVSs) represent higher-yield, higher-risk corporate bonds.
Evidence: The Total Value Locked (TVL) in restaking protocols exceeds $15B, demonstrating demand for yield aggregation beyond simple staking, with EigenLayer dominating the sector.
takeaways
WHY RESTAKING IS THE INTERNET BOND
Key Takeaways
Restaking transforms idle crypto capital into productive, yield-bearing collateral that secures the entire decentralized stack.
01
The Problem: Idle Capital
Proof-of-Stake created a massive, static pool of security capital. $100B+ in ETH was locked, earning only base staking yield while new protocols struggled to bootstrap their own security from scratch.
$100B+
Idle Capital
~3-5%
Base Yield
02
The Solution: EigenLayer & AVSs
EigenLayer's restaking primitive allows staked ETH to be rehypothecated to secure new services called Actively Validated Services (AVSs). This creates a flywheel where capital efficiency meets security demand.\n- Capital Efficiency: One stake secures multiple protocols.\n- Security Bootstrap: New chains (e.g., EigenDA, Espresso) rent Ethereum-grade security instantly.
$15B+
TVL
50+
AVSs
03
The Internet Bond Mechanism
Restaked ETH functions as a risk-adjusted yield instrument. Operators earn fees from AVSs, with slashing as the enforcement mechanism. This creates a native crypto fixed-income market.\n- Yield Stacking: Base staking + AVS rewards.\n- Risk Markets: Protocols like Eigenpie and Renzo abstract slashing risk for users.
2-10x
Yield Multiplier
Slashing
Enforcement
04
The Systemic Risk
Concentrated slashing risk creates financial contagion vectors. A failure in a major AVS could cascade through the restaking ecosystem, threatening the security of all pooled capital. This is the inherent trade-off of the bond analogy.
High
Correlation
Cascading
Slashing Risk
05
The LRT (Liquid Restaking Token) Wars
LRTs like ether.fi's eETH, Puffer's pufETH, and Kelp's rsETH are becoming the dominant user-facing layer. They abstract technical complexity, aggregate yields, and compete on points programs, creating a liquidity layer atop the restaking core.
$10B+
LRT TVL
DeFi Native
Composability
06
Beyond Ethereum: The Cross-Chain Security Layer
The internet bond thesis extends interchain. Projects like Babylon are bringing Bitcoin security to Cosmos and beyond, while EigenLayer's partnership with AltLayer shows restaking's role in launching rollups. The endgame is a global, cross-chain security marketplace.
Bitcoin
Security Export
Rollups
Instant Security
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$20M+
TVL Overall