Building on Native Restaking vs Building on LRTs: Integration

Direct AVS Integration: Builders interact directly with EigenLayer's smart contracts (e.g., StrategyManager). This provides maximum control over slashing conditions and operator delegation logic. This matters for highly specialized protocols like EigenDA or Omni Network that require bespoke security parameters.

Native ETH as Collateral: Your protocol secures its AVS with restaked ETH, the base asset of the ecosystem. This enables deeper, trust-minimized composability with other DeFi primitives (e.g., using stETH in Aave). This matters for building infrastructure layers where asset fungibility and maximal economic security are non-negotiable.

Single-Token Abstraction: Integrate a standard ERC-20 token like ezETH (Renzo) or rsETH (Kelp DAO) instead of managing multiple operator sets. This reduces integration complexity to a simple balance check. This matters for dApps and middleware (e.g., lending markets, yield aggregators) that prioritize developer speed and user liquidity.

Automatic Yield Optimization: LRT protocols like Ether.fi and Puffer automatically allocate restaked capital across AVSs to maximize rewards. Your users get a yield-bearing, liquid asset from day one. This matters for consumer-facing applications where you need to abstract away restaking complexity and provide immediate DeFi utility.

Operator Management Burden: You must implement logic for operator selection, slashing monitoring, and reward distribution. This requires significant smart contract development and ongoing operational vigilance. This is a trade-off for teams without the resources to manage this complexity.

Protocol Dependency: You inherit the security and centralization risks of the LRT provider (e.g., their operator set, governance, and potential points programs). A slashing event or failure at the LRT layer impacts your application. This is a trade-off where you sacrifice some control for simplicity.

Direct EigenLayer Integration: Protocols interact directly with the core EigenLayer smart contracts, receiving security from the entire native restaked ETH pool (~$18B TVL). This matters for protocols requiring maximum economic security and direct slashing enforcement, like new L1s or hyperscale data availability layers.

Full Customization of AVS Logic: Builders have complete control over their Actively Validated Service (AVS) architecture, including operator set selection, reward distribution, and slashing conditions. This matters for complex, novel use cases (e.g., decentralized sequencing, interoperability layers) that don't fit a standardized LRT model.

Standardized ERC-20 Interface: Integrate with LRTs (e.g., ether.fi's weETH, Renzo's ezETH) just like any other yield-bearing token. This matters for DeFi protocols (DEXs, lending markets, yield aggregators) that can bootstrap TVL and composability instantly without managing operator sets or slashing logic.

Built-in Liquidity Layer: LRTs solve the liquidity problem for restaked assets, enabling users to exit positions instantly via DEXs. This matters for consumer-facing dApps where seamless deposits/withdrawals and capital efficiency are critical for adoption, avoiding the lock-up period of native restaking.

Steeper Development Overhead: Requires deep integration with EigenLayer's operator registry, delegation manager, and slashing mechanisms. This matters for teams with limited protocol-level engineering resources, as it adds significant audit burden and ongoing maintenance compared to a simple token integration.

Indirect Security Claims: Your protocol's security is derived from the LRT provider's operator set and strategy, not the full EigenLayer pool. This matters for security-critical infrastructure where you cede control over slashing parameters and may face yield dilution from the LRT's fee structure (e.g., 10-20% commission).

Direct access to Ethereum's consensus layer: Protocols like EigenLayer and Babylon integrate natively, inheriting Ethereum's ~$100B+ security budget directly. This is critical for high-value, trust-minimized applications like new L1s, bridges, and data availability layers that cannot tolerate additional trust assumptions.

Full control over slashing conditions and rewards: Builders define their own cryptoeconomic security parameters and validator sets. This is essential for bespoke AVS (Actively Validated Service) designs requiring custom fault proofs, like AltLayer's rollup stacks or Omni Network's cross-rollup messaging.

Unlock liquidity from staked ETH: LRTs like ether.fi's eETH and Renzo Protocol's ezETH turn staked positions into a liquid, yield-bearing asset. This matters for DeFi-native protocols (e.g., lending on Aave, collateral on MakerDAO) where user capital cannot be locked indefinitely.

Single-token standard (ERC-20) integration: Builders interact with a familiar, composable token instead of complex EigenLayer smart contracts. This drastically reduces development overhead for yield-aggregating vaults, leveraged strategies, and perp DEXs that need to manage yield streams from multiple AVSs.

High technical and operational overhead: Requires deep integration with EigenLayer's operator registry, slashing manager, and delegation system. This adds months of development time and ongoing monitoring, a significant burden for smaller teams or fast-moving DeFi projects.

Introduces LRT protocol risk: Users and integrators must trust the LRT provider's node operator selection, reward distribution, and upgrade mechanisms. This is a critical consideration for institutional-grade custody solutions or protocols where security is non-delegable.