Governance is no longer isolated. The capital securing a network now simultaneously secures and governs dozens of others via restaking protocols like EigenLayer and Karak. This creates a new, interconnected power structure.
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The Future of Governance: Staking Power vs. Restaking Power
The rise of restaking creates a new political axis in crypto governance. We analyze the power shift from base-layer Ethereum validators to the protocols and DAOs that control the allocation of restaked capital.
introduction
THE POWER SHIFT
Introduction
Blockchain governance is undergoing a fundamental realignment, moving from simple token staking to the complex, high-leverage dynamics of restaking.
Staking power is static; restaking power is multiplicative. A single staked ETH validates Ethereum. That same ETH, when restaked, can secure an AVS (Actively Validated Service) like EigenDA or a cross-chain bridge, amplifying its governance influence across the ecosystem.
This creates systemic risk and opportunity. The re-staker's dilemma emerges: validators must now manage slashing risks across multiple, potentially conflicting, networks. This centralizes critical security decisions in the hands of a few large operators.
Evidence: EigenLayer has over $15B in TVL, demonstrating that capital seeks yield and influence. This capital is now the primary governance lever for emerging infrastructure, from oracles to new L2s.
thesis-statement
THE POWER SHIFT
Thesis Statement
The future of on-chain governance is a conflict between native staking power and the emergent, composable power of restaking.
Restaking redefines governance capital. It transforms idle staked ETH from a single-purpose security asset into a portable, multi-chain governance token via EigenLayer, creating a new political economy.
Staking power is sovereign but isolated. ATOM stakers govern only Cosmos Hub; their influence is bounded by the chain's utility, creating governance silos.
Restaking power is fluid and extractive. EigenLayer operators can direct pooled security to govern protocols like EigenDA or AltLayer, creating a meta-governance layer that transcends any single chain.
Evidence: Over $15B in ETH is now restaked on EigenLayer, demonstrating massive demand for yield beyond native staking, which directly funds this new political machine.
market-context
THE POWER SHIFT
Market Context: The Restaking Juggernaut
Restaking is redefining governance by decoupling staking power from economic security, creating a new political class of AVS operators.
Restaking creates a political class. EigenLayer AVS operators wield governance power in protocols like EigenDA or AltLayer without holding the underlying native token. This decouples voting rights from direct economic alignment, a fundamental shift from traditional PoS models.
Staking power is local, restaking power is global. A staker's influence is confined to their home chain. A restaker's delegated security is a portable asset that influences governance across multiple, unrelated AVS networks simultaneously.
The leverage is immense. A single restaked ETH position can secure and thus influence dozens of AVSs. This creates concentrated governance power that dwarfs the influence of a native token holder in any single ecosystem.
Evidence: EigenLayer's $15B+ TVL represents a latent governance army. Protocols like EigenDA and Omni Network will launch with governance dictated not by token holders, but by the operators securing their networks.
key-trends
FUTURE OF GOVERNANCE
Key Trends: The Mechanics of Power
The battle for protocol control is shifting from simple token staking to the strategic rehypothecation of security capital.
01
The Problem: Staking is a Silos of Power
Traditional staking locks capital into a single protocol, creating governance apathy and low voter turnout. The power is static, fragmented, and economically inefficient.
- Inefficient Capital: $100B+ in staked ETH yields governance rights only for Ethereum.
- Security vs. Governance Mismatch: Stakers secure the chain but often lack expertise to govern dApps built on it.
- Voter Fatigue: Managing votes across dozens of siloed protocols is operationally impossible.
<10%
Avg. Voter Turnout
$100B+
Siloed Capital
02
The Solution: EigenLayer & the Restaking Primitive
EigenLayer transforms staked ETH into a reusable security asset. Restakers can delegate their cryptoeconomic security to Actively Validated Services (AVSs), bundling security with governance influence.
- Portable Power: One stake secures multiple protocols, aligning governance with security provision.
- Professional Delegation: Restakers delegate to operators (e.g., Figment, Blockdaemon) who vote on their behalf, solving expertise gaps.
- Economic Gravity: Creates a market for governance, where AVSs compete for the highest-quality staked capital.
$15B+
TVL Restaked
200+
AVSs Secured
03
The New Battleground: AVS Operator Cartels
Power consolidates not with token holders, but with the node operators who run AVS software. They become the de facto governors of the networks they secure.
- Cartel Formation: Large operators like Everstake and Kiln can form voting blocs controlling multiple major protocols.
- Slashing as Governance: Operator misbehavior is punished via slashing, making security enforcement a direct governance action.
- Protocol Capture Risk: A dominant operator cartel could impose its will on restaked protocols, creating new centralization vectors.
>60%
Top 10 Operator Share
High
Coordination Risk
04
The Counter-Trend: Intents and MEV Governance
Governance is moving downstream from protocol parameters to transaction flow. Intents-based systems (UniswapX, CowSwap) and MEV relays (Flashbots SUAVE) create new power centers.
- Flow is Power: Whoever controls order flow aggregation (via solvers or searchers) dictates market outcomes, not just token votes.
- Implicit Governance: Rules are enforced by network architecture and economic incentives, not on-chain proposals.
- Opaque Power: This creates shadow governance where influence is exerted through private order flow deals and builder cartels.
80%+
OF Captured by Top 3
$1B+
Annual MEV Value
GOVERNANCE & ECONOMIC CONTROL
Power Dynamics: Staking vs. Restaking
Compares the influence and risk profiles of native staking versus restaking protocols like EigenLayer, analyzing how each model concentrates or fragments network control.
| Governance Feature / Metric | Native Staking (e.g., Ethereum) | Restaking (e.g., EigenLayer) | Hybrid / Future Model |
|---|---|---|---|
Primary Governance Scope | Single Network (e.g., Ethereum Consensus) | Multiple AVSs (e.g., Oracles, Bridges, DA Layers) | Cross-Chain Super-DAO |
Voting Power Concentration | Top 3 Entities: ~44% (Lido, Coinbase, Kraken) | Top 3 LSTs + EigenLayer: >60% (Projected) | Fragmented across specialized staking pools |
Slashing Jurisdiction | Core Protocol Rules Only | AVS-Specific + Protocol Rules (Layered Slashing) | Programmable, Multi-Asset Slashing Contracts |
Capital Efficiency for Voter Power | 1x (ETH staked = ETH voting power) |
| Variable (Leveraged voting via derivative positions) |
Exit Liquidity / Unbonding Period | Fully Liquid (Withdrawal Queue) or ~7-30 days | Liquid Restaking Tokens (e.g., ezETH) or AVS-specific delays | Instant via AMMs, subject to pool depth |
Protocol Revenue Capture by Stakers | ETH Issuance + Maximal Extractable Value (MEV) | AVS Service Fees + MEV + Native Rewards | Fee-Switching across bundled services |
Systemic Risk from Failure | Contained to single L1 consensus | Cascading slashing across multiple AVSs (Contagion Risk) | Isolated risk modules with defined loss limits |
deep-dive
THE POWER SHIFT
Deep Dive: The Political Axis in Practice
Restaking protocols like EigenLayer are creating a new political class whose influence is decoupled from direct protocol governance.
Staking secures a chain; restaking secures an economy. Native stakers (e.g., Ethereum validators) secure a single state machine. Restakers secure a portfolio of actively validated services (AVS) like AltLayer rollups and EigenDA data layers, concentrating economic power across multiple protocols.
Governance power becomes a derivative of security. A protocol's political influence is now outsourced to the restaked capital securing it. This creates a meta-governance layer where AVS operators, not token holders, become the primary political constituency.
Counter-intuitively, this dilutes direct democracy. While Lido's stETH holders vote on LidoDAO, EigenLayer restakers delegate security decisions to operators. The result is a shift from one-token-one-vote to a professionalized security market with concentrated operator power.
Evidence: EigenLayer's $15B+ TVL demonstrates capital's preference for yield aggregation over direct governance. This capital will dictate the security and, by extension, the political viability of hundreds of new AVS networks.
risk-analysis
GOVERNANCE FRAGILITY
Risk Analysis: The Bear Case for Restaking Politics
Restaking concentrates political power, creating systemic risks that could undermine the very networks it aims to secure.
01
The Cartel Problem: Lido for Governance
EigenLayer's restaked ETH becomes a dominant, unified voting bloc across multiple AVSs. This creates a meta-governance cartel where a few large operators (e.g., Coinbase, Figment, Kiln) can dictate outcomes for dozens of protocols simultaneously, replicating the Lido/Curve governance dilemma at a higher, more dangerous layer.
- Single Point of Failure: Compromise of a major operator's keys impacts all secured chains.
- Voter Apathy Squared: Delegators double-delegate governance, leading to extreme centralization of passive voting power.
>60%
Potential Cartel Share
1→N
Failure Domino
02
The Slashing Dilemma: Political vs. Technical Fault
Restaking introduces subjective, politically-charged slashing conditions (e.g., for oracle deviations or sequencer censorship). This transforms what should be objective cryptographic security into a governance minefield. Disputes will be settled by the very operators whose capital is at stake, creating a clear conflict of interest.
- Governance Capture: Rich operators can vote to avoid slashing for their own misbehavior.
- Protocol Paralysis: Fear of contentious slashing votes may prevent legitimate enforcement, degrading security guarantees.
Subjective
Slashing Risk
High Stakes
Conflict of Interest
03
The Liquidity Black Hole: TVL as a Governance Weapon
The $15B+ TVL in restaking isn't just securing networks; it's a political war chest. In a crisis, the threat of mass unstaking and withdrawal can be used to coerce protocol upgrades or veto decisions. This gives restakers outsize leverage over AVS development roadmaps, prioritizing the stability of the restaking pool over the health of individual protocols.
- Economic Coercion: "Adopt our fork or we drain your security."
- Innovation Tax: New AVSs must design governance to appease the restaking oligopoly.
$15B+
Political TVL
Hostage
Protocol Dynamics
04
The Interop Trap: Cross-Chain Governance Attacks
By securing bridges and oracles (like LayerZero, Hyperlane, Wormhole), restakers gain the power to validate fraudulent state transitions. A politically coordinated group could approve a malicious bridge message to drain a chain, framing it as a "legitimate" governance action. This creates a new attack vector where social consensus on Ethereum can be weaponized to attack other ecosystems.
- Bridge as a Weapon: Governance keys become bridge keys.
- Cross-Chain Contagion: A political dispute on one chain triggers a liquidity crisis on another.
Multi-Chain
Attack Surface
Unprecedented
Risk Vector
future-outlook
THE POWER SHIFT
Future Outlook: The Next 18 Months
Governance power will shift from native staking to restaking, creating new attack surfaces and political coalitions.
Restaking dominates governance power. Protocols like EigenLayer and Karak will hold more voting weight than native L1 stakers within 18 months. This centralizes political influence in a few restaking hubs.
AVS governance becomes the real battleground. The fight for Actively Validated Services (AVS) slashing rights will be more critical than base-layer votes. Coalitions will form between AVS operators and liquid restaking tokens (LRTs) like ether.fi and Renzo.
Cross-chain governance emerges as a standard. Restaked security will enable shared governance frameworks that span multiple chains, moving beyond isolated DAOs. This creates systemic risk if a dominant AVS operator is compromised.
Evidence: EigenLayer already secures over $15B in TVL, giving its operator set indirect influence over protocols like EigenDA, AltLayer, and future EigenVM rollups.
takeaways
THE FUTURE OF GOVERNANCE
Key Takeaways for Builders and Investors
Governance is shifting from a simple staking model to a complex, high-stakes competition for restaked capital and security.
01
The Problem: Governance is a Capital Sink
Traditional token voting locks billions in non-productive capital. This creates a massive opportunity cost for holders and fails to align incentives with network security.
- Inefficient Allocation: Capital sits idle instead of securing other protocols.
- Misaligned Incentives: Governance power is divorced from security contributions, leading to plutocracy.
$10B+
Idle Capital
0%
Yield on Gov Tokens
02
The Solution: EigenLayer & the Restaking Primitive
Restaking allows ETH stakers to rehypothecate their security to Actively Validated Services (AVSs). This transforms governance from a passive right into an active, yield-generating security service.
- Capital Efficiency: Stakers earn yield from both consensus and AVS fees.
- Security as a Service: AVS operators (like rollups, oracles) rent Ethereum's economic security.
$15B+
TVL
50+
AVSs
03
The New Battleground: AVS Operator Selection
The real governance power shifts to delegators choosing AVS operators. This creates a competitive market where operators must prove reliability and slashing risk is priced into yields.
- Operator Reputation: A new class of professional node operators emerges (e.g., Figment, Kiln).
- Risk Markets: Protocols like EigenDA or Espresso must compete for the highest-quality, lowest-cost security.
10-20%
AVS Operator Cut
Dynamic
Slashing Risk
04
The Investor Play: Back the Operator Stack
VCs should invest in the infrastructure layer enabling restaking, not just the governance tokens. The value accrual moves to operator networks, middleware, and risk-assessment tools.
- Infrastructure Bets: Operator nodes, delegation platforms, and slashing insurance.
- Avoiding Token Dilution: Native governance tokens face dilution from restaking rewards and competing AVS tokens.
New Asset Class
Operator Equity
High
Infrastructure Moats
05
The Builder Mandate: Design for Slashing
Protocols using restaked security (AVSs) must have cryptoeconomically sound slashing conditions. Vague or excessive slashing will be rejected by the capital market, killing your service.
- Precise Faults: Define clear, objective, and attributable faults for slashing.
- Market Alignment: Your AVS's success depends on attracting high-quality, low-cost security from operators.
Critical
Slashing Design
Capital Cost
Primary Variable
06
The Endgame: Fragmented Security vs. Ethereum Hegemony
Restaking could centralize security around Ethereum, but may also fragment it as competing restaking hubs (e.g., Babylon on Bitcoin, Solana) emerge. The winning model will offer the best risk-adjusted yield for stakers.
- Security Wars: Ethereum L2s, Solana, and Cosmos zones will compete for the same capital.
- Winner-Take-Most: Network effects in security could lead to a single dominant restaking layer.
Multi-Chain
Battleground
Risk/Reward
Deciding Factor
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