Staking liquidity is trapped. The standard 7-28 day unbonding period for Proof-of-Stake assets like ETH or ATOM creates a significant opportunity cost, forcing users to choose between security rewards and capital agility.
wallet-wars-smart-accounts-vs-embedded-wallets
Blog
The Future of Staking: Unbond, Swap, and Restake in One Tx
Staking is broken. Capital is trapped for weeks. We explore how bundled transactions via smart accounts enable atomic migration of staking positions, unlocking liquidity and reshaping the wallet wars.
introduction
THE STAKING BOTTLENECK
Introduction
Current staking mechanics create a multi-day liquidity lock-up, a critical inefficiency that new protocols are solving.
The solution is atomic composition. Protocols like EigenLayer and StakeWise V3 abstract staked positions into liquid tokens, but the full workflow of unbonding, swapping, and restaking across chains remains fragmented and slow.
The next evolution is a single transaction. Emerging intent-based architectures, inspired by UniswapX and CowSwap, will enable users to express a desired end-state—like 'restake my ATOM on Ethereum'—delegating the complex cross-chain execution to a solver network.
Evidence: The liquid staking derivatives market exceeds $50B TVL, proving demand for liquidity, but the cross-chain restaking volume on EigenLayer is constrained by the underlying bridge and swap latency.
thesis-statement
THE UNBUNDLING
Thesis Statement
The next evolution of staking is a single transaction that atomically unbonds, swaps, and restakes capital, eliminating liquidity lock-up and manual reallocation.
Staking liquidity is trapped. Today's staked assets are illiquid, forcing a multi-day unbonding period before capital can be redeployed to higher-yield opportunities on chains like Solana or Avalanche.
The solution is atomic composability. A single transaction will execute a trust-minimized unbond via EigenLayer's AVS slashing, route funds through a DEX aggregator like 1inch, and finalize restaking via a smart contract on the destination chain.
This eliminates manual reallocation risk. The user specifies an intent (e.g., 'maximize yield'), and the transaction either succeeds completely or fails, preventing funds from being stranded in an intermediate state during market volatility.
Evidence: The success of intent-based architectures like UniswapX and CowSwap, which handle routing and settlement atomically, proves the demand for this abstracted, gas-efficient execution model for complex DeFi operations.
market-context
THE LIQUIDITY TRAP
Market Context: The Staking Liquidity Trap
Current staking mechanics create a multi-billion dollar liquidity sink, forcing users to choose between security and capital efficiency.
Unbonding periods are capital traps. A user's staked ETH is locked for 27 days during unbonding, creating a massive opportunity cost and forcing a binary choice between security yield and DeFi participation.
Liquid staking tokens (LSTs) are a partial solution. Protocols like Lido and Rocket Pool create a liquid wrapper, but this introduces a second-layer derivative with its own depeg risk and composability friction.
The restaking dilemma compounds the problem. EigenLayer users face a double liquidity lock: first staking ETH, then staking their LST (stETH) into the protocol, which itself imposes its own withdrawal queue.
Evidence: Over 40% of staked ETH is in LSTs, representing ~$50B in capital that must choose between native staking rewards and the higher yields of EigenLayer or DeFi protocols like Aave.
key-trends
THE FUTURE OF STAKING: UNBOND, SWAP, AND RESTAKE IN ONE TX
Key Trends Enabling Atomic Migration
The 21-day unbonding period is a multi-billion dollar capital inefficiency. These three trends are converging to make atomic, cross-chain restaking a reality.
01
The Problem: The $60B+ Unbonding Prison
Staked capital is locked and illiquid for weeks, creating massive opportunity cost and systemic risk during market volatility.\n- $60B+ in Ethereum alone sits idle during unbonding.\n- Forces users to choose between security yield and capital agility.\n- Creates a brittle system where liquidity crunches are predictable.
21 Days
Lockup
$60B+
Capital Idle
02
The Solution: Intent-Based Settlement Networks
Protocols like UniswapX and CowSwap abstract execution. Users declare a desired outcome (e.g., 'restake my ETH on EigenLayer'), and a network of solvers competes to fulfill it atomically.\n- Shifts burden from user to solver network.\n- Enables complex, cross-chain swaps without user-side liquidity.\n- ~500ms settlement via Flash Loans and MEV capture.
~500ms
Settlement
0 Liquidity
Required
03
The Enabler: Universal State Proofs
Bridges like LayerZero and Across are moving from simple asset transfer to verifiable state attestation. This allows solvers to prove the state of a source chain (e.g., 'ETH is unstaked') on a destination chain within a single transaction.\n- ZK proofs or optimistic verification for trust-minimized bridging.\n- Enables atomic composition of actions across sovereign chains.\n- Critical for proving unbonding intent without waiting periods.
Trust-Minimized
Verification
1 Tx
Cross-Chain
04
The Catalyst: Programmable Restaking Vaults
Infrastructure like EigenLayer and Babylon are creating standardized interfaces for restaking. This turns staked assets into a programmable security primitive that can be delegated atomically.\n- Vaults accept verified proof of unbonding as valid deposit.\n- Creates a liquid market for validator slots across ecosystems.\n- Enables >20% APY opportunities by stacking native + restaking yield.
>20%
Stacked APY
Atomic
Delegation
STAKING LIQUIDITY PROTOCOLS
The Opportunity Cost of Lockup: A Data Snapshot
Comparison of mechanisms for unlocking staked capital, highlighting the trade-offs between liquidity, yield, and security.
| Feature / Metric | Native Staking (Baseline) | Liquid Staking Token (LST) | Restaking (LRT) | Unbond, Swap, Restake (Target State) |
|---|---|---|---|---|
Unbonding Period | 21-28 days | 0 days | 21-28 days | 0 days |
Capital Efficiency | 0% (locked) | ~90% (via LST DeFi) | ~90% (via LRT DeFi) |
|
Yield Source | Base Staking APR (3-5%) | Base Staking APR + LST DeFi Yield | Base Staking + Restaking Points (e.g., EigenLayer, Karak) | Base + Restaking + Cross-Chain MEV/Arbitrage |
Protocol Security | Direct to L1 | Derivative of L1 Security | Extends L1 Security (shared risk) | Extends L1 Security (dynamic allocation) |
Exit Liquidity Risk | None (native) | Dependent on LST/AMM depth (e.g., stETH) | Dependent on LRT/AMM depth (e.g., ezETH) | Atomic swap eliminates peg risk |
Settlement Finality | L1 Finality (~15 min) | Instant (ERC-20 transfer) | L1 Finality for unbonding | Atomic (via intent solver like UniswapX, Across) |
Cross-Chain Utility | None | Via bridging (risk layer: LayerZero, Wormhole) | Via bridging (risk layer: LayerZero, Wormhole) | Native via atomic intent (e.g., Across, Socket) |
Key Example | Ethereum Beacon Chain | Lido (stETH), Rocket Pool (rETH) | EigenLayer (ezETH), Kelp (rsETH) | Theoretical (enabled by Across, UniswapX) |
deep-dive
THE ARCHITECTURE
Deep Dive: The Technical Stack for Atomic Staking
Atomic staking bundles unbonding, swapping, and restaking into a single, failure-proof transaction, eliminating capital lockup and manual steps.
The core innovation is atomic composability. Protocols like EigenLayer and Symbiotic provide the restaking primitive, but atomic staking requires a coordinating settlement layer. This layer uses intent-based architectures and conditional transaction logic to orchestrate the multi-chain workflow as a single state transition.
Solver networks execute the user's intent. A user submits a signed intent to 'unbond ETH from Lido, bridge to Arbitrum, and restake with EigenLayer'. Off-chain solvers (like those in CowSwap or UniswapX) compete to source liquidity and propose the optimal cross-chain route, abstracting complexity from the user.
Secure cross-chain messaging is non-negotiable. The atomic bundle relies on verifiable proofs from bridges like Across or LayerZero to finalize each leg. A failure in the bridge attestation causes the entire transaction to revert, which is the definition of atomicity and protects user funds.
The final settlement uses a specialized smart account. An ERC-4337 Account Abstraction wallet or a custom smart contract acts as the single signer and coordinator. It holds temporary custody of assets between steps, enforcing all conditions atomically on a settlement chain like Ethereum or Arbitrum.
This eliminates re-staking's biggest friction: lockup periods. Traditional restaking requires a 7-day unbonding wait from Lido or Rocket Pool before assets are movable. Atomic staking uses instant liquidity from LP pools and bridge liquidity networks, making capital efficiency instantaneous.
protocol-spotlight
THE FUTURE OF STAKING: UNBOND, SWAP, AND RESTAKE IN ONE TX
Protocol Spotlight: Early Movers & Required Infrastructure
The next wave of staking infrastructure eliminates capital lock-up and manual processes, enabling atomic restaking across chains and asset types.
01
The Problem: Capital Lock-Up is a $100B+ Inefficiency
Staked assets are illiquid for weeks (e.g., 21-28 days on Ethereum). This creates massive opportunity cost, prevents portfolio rebalancing, and locks $100B+ in TVL from participating in DeFi or migrating to higher-yield chains.\n- Opportunity Cost: Idle capital during unbonding periods.\n- Portfolio Rigidity: Cannot react to market shifts or new yield opportunities.\n- User Friction: Multi-step, multi-day manual processes deter participation.
21-28d
Lock-Up
$100B+
Inefficient TVL
02
The Solution: Atomic Unbonding via Liquidity Layers
Protocols like EigenLayer (restaking) and StakeWise V3 (modular staking) abstract the unbonding period into a liquid secondary market. This allows the staked asset's economic security to be instantly redeployed.\n- Instant Liquidity: Receive a liquid staking token (LST) representing your claim.\n- Atomic Swaps: Use intents and solvers (via CowSwap, UniswapX) to swap the LST for a new asset in one bundle.\n- Cross-Chain Restake: Bridges like LayerZero and Axelar enable the new asset to be restaked on a destination chain atomically.
1 Tx
Full Flow
~500ms
Swap Latency
03
Required Infrastructure: Intent-Based Solvers & Universal Settlement
The 'swap' in the middle of the flow cannot rely on traditional AMMs due to liquidity fragmentation. It requires intent-based architectures and a universal settlement layer.\n- Intent Solvers: Networks like Anoma and SUAVE find optimal cross-chain liquidity paths.\n- Settlement Layer: A chain (e.g., Ethereum, Cosmos) or shared sequencer (e.g., Espresso, Astria) that guarantees atomic execution of the unbond-swap-restake bundle.\n- Security: Relies on underlying bridge security (LayerZero, Wormhole, Across) for cross-chain message passing.
10x
Better Execution
-50%
Slippage
04
Early Mover: EigenLayer & the AVS Liquidity Flywheel
EigenLayer isn't just a restaking protocol; it's becoming the liquidity backbone for Actively Validated Services (AVSs). Its native liquidity enables the atomic restaking loop.\n- LST as Collateral: stETH, rETH, etc., are primary deposit assets.\n- AVS Demand: New services (oracles, DA layers) create perpetual demand for restaked security, pulling liquidity through the unbond-swap-restake pipeline.\n- Economic Moat: The first protocol to achieve $15B+ in TVL for restaking creates a deep liquidity pool that defines market rates for shared security.
$15B+
TVL
50+
AVSs
05
The Endgame: Programmable Staking Portfolios
The final state is not one-click restaking, but autonomous staking strategies managed by smart contracts or agents. Users express yield intent, and the infrastructure executes complex, cross-chain rebalancing.\n- Automated Vaults: Similar to Yearn Finance, but for staking positions across multiple chains and AVSs.\n- Risk Engine Integration: Protocols like Gauntlet and Chaos Labs provide on-chain risk parameters for automatic allocation shifts.\n- Capital Efficiency: Unlocked staking capital becomes the most dynamic and yield-seeking segment of crypto.
24/7
Rebalancing
Multi-Chain
Coverage
06
The Bottleneck: Cross-Chain Security Assurances
Atomic restaking is only as secure as its weakest bridge. The industry must converge on standardized security frameworks for cross-chain value and state transfers.\n- Shared Security Models: Leveraging restaked ETH via EigenLayer to secure bridges themselves (e.g., Omni Network).\n- Proof Standardization: Movement towards light client bridges and zk-proofs for state verification (zkBridge).\n- Insurance Slashing: Protocols like EigenLayer and Cosmos Interchain Security must develop clear slashing conditions for bridge faults to underwrite the system's trustlessness.
$1B+
Bridge Hacks (2024)
Critical
Dependency
counter-argument
THE LIQUIDITY TRAP
Counter-Argument: Why This Is Harder Than It Looks
Atomic unbond-swap-restake requires deep, coordinated liquidity across multiple layers that does not yet exist.
Synchronous liquidity is the bottleneck. A single transaction requires a validator's unbonding stake to be instantly available as liquid staking tokens (LSTs) on the destination chain. This demands a pre-funded liquidity pool from protocols like EigenLayer or StakeWise, which currently operate asynchronously with significant capital inefficiency.
Cross-chain settlement is not atomic. Moving unbonded value between chains via bridges like LayerZero or Axelar introduces latency and trust assumptions. The 7-28 day unbonding period for many Proof-of-Stake chains creates a mismatch with the sub-second finality expected by DeFi primitives on the destination, requiring complex and risky bridging derivatives.
Smart contract risk compounds. The user's single signature initiates a cascading multi-protocol interaction involving the native staking module, a liquid staking derivative, a cross-chain messaging layer, and a restaking contract. A failure in any component, like those seen in early Across Protocol integrations, results in a partial or stuck transaction with locked capital.
Evidence: No major restaking protocol currently offers this feature natively. EigenLayer's restaking is limited to assets already on Ethereum, and cross-chain visions rely on nascent, untested bridged LST standards that lack the deep liquidity of native assets like Lido's stETH.
risk-analysis
OPERATIONAL & SYSTEMIC RISKS
Risk Analysis: What Could Go Wrong?
Atomic unbond-swap-restake introduces new failure modes beyond traditional staking or DeFi.
01
The Cross-Chain Settlement Risk
The atomic transaction depends on the liveness and finality of multiple, heterogeneous chains. A delay or reorg on the destination chain (e.g., Ethereum) after assets are unbonded on the source chain creates a dangerous limbo state.
- Bridge Exploit Surface: Integrations with LayerZero, Axelar, or Wormhole inherit their security assumptions and potential vulnerabilities.
- Slippage & MEV: The embedded swap is a prime target for MEV bots, potentially degrading user yield by 5-15% on volatile assets.
3-5 Chains
Avg. Settlement Depth
12s-1min
Vulnerability Window
02
The Smart Contract Complexity Bomb
Monolithic smart contracts orchestrating unbonding, bridging, swapping, and restaking become single points of failure with >$100M+ TVL at risk. A bug in one module can drain the entire system.
- Upgrade Governance Risk: Admin keys or DAO multisigs controlling upgrades are high-value attack targets.
- Integration Fragility: Reliance on oracles (e.g., Chainlink) for pricing and external keepers for triggering actions adds dependency layers.
10,000+
Lines of Code
7-30 Days
Unbonding Period
03
The Liquidity & Centralization Trap
The 'swap' leg requires deep, resilient liquidity pools. During market stress, liquidity can vanish, causing failed transactions or catastrophic slippage for users.
- Validator Centralization: Efficient restaking may funnel assets to a few large node operators or protocols like EigenLayer, recreating systemic risk.
- TVL Contagion: A failure or slash on the restaking side could trigger a reflexive unwind across all integrated chains.
$50M+
Min. Liquidity Required
>60%
Top 5 Provider Share
04
The Regulatory Ambiguity Hammer
Bundling staking (often a security) with swapping and cross-chain transfers creates a regulatory nightmare. Agencies like the SEC could classify the entire pipeline as an unregistered securities offering.
- Jurisdictional Arbitrage: Users and protocol developers face conflicting rules from the US, EU (MiCA), and other regions.
- Sanctions Compliance: Atomic cross-chain flows are notoriously difficult for OFAC-compliant validators or bridges to monitor and censor.
3+
Major Regimes
High
Enforcement Risk
future-outlook
THE LIQUIDITY ENGINE
Future Outlook & Investment Thesis
The future of staking is a single atomic transaction that unbonds, swaps, and restakes capital, eliminating liquidity fragmentation and opportunity cost.
Atomic Restaking Transactions are the endgame. The current multi-step, multi-day process of unbonding ETH to move it between EigenLayer, Babylon, or Karak creates massive capital drag. A single transaction that atomically executes the unbond, cross-chain swap via Axelar/LayerZero, and deposit into a new restaking vault eliminates this friction entirely.
Liquidity becomes programmatic capital. This transforms staked assets from static collateral into a dynamic, yield-seeking fluid. Protocols like UniswapX's intents and Across' optimistic bridging provide the primitive for the swap leg, while smart contract wallets like Safe enable the complex atomic execution. Capital automatically flows to the highest validated yield.
The investment thesis targets infrastructure enablers. The winners are not the restaking protocols themselves, but the cross-chain messaging layers (Wormhole, CCIP), intent-solvers (PropellerHeads, Anoma), and smart account platforms that orchestrate the flow. Their total addressable market becomes the entire staked asset base across all chains.
Evidence: Ethereum's ~$100B staked ETH represents locked, illiquid capital for weeks. A system that unlocks this for programmatic restaking captures the multi-billion dollar opportunity cost currently paid by stakers waiting for unbonding periods.
takeaways
THE FUTURE OF STAKING
Key Takeaways for Builders & Investors
The next wave of liquid staking moves beyond simple tokenization, collapsing the unbonding period, asset swap, and restaking into a single atomic transaction.
01
The Unbonding Period is a $100B+ Opportunity Cost
Traditional staking locks capital for 7-28 days, creating massive inefficiency and liquidity fragmentation. This is the single largest friction point for institutional adoption.
- Opportunity Cost: Idle capital during unbonding forfeits yield and trading opportunities.
- Liquidity Fragmentation: Creates separate markets for liquid staking tokens (LSTs) and native assets.
- User Experience Barrier: Complex multi-step process discourages active portfolio management.
7-28d
Lock-up
$100B+
Opportunity Cost
02
Atomic Unbond-Swap-Restake via Intent-Based Architectures
Protocols like UniswapX and CowSwap pioneered intent-based trading. This model is now being applied to staking, where a user expresses a desired end-state (e.g., "restake my ETH from Lido to EigenLayer") and a solver network fulfills it atomically.
- Solver Competition: Drives better execution via access to private liquidity and cross-chain bridges like LayerZero and Across.
- Atomic Guarantee: User either gets the desired restaked position or the transaction fails, eliminating principal risk.
- Composability: Enables complex DeFi strategies in one click.
1 Tx
Workflow
~0s
Effective Delay
03
The New Battleground: Solver Infrastructure & Liquidity Networks
The value accrual shifts from the staking protocol to the infrastructure that guarantees atomic execution. This creates a new layer in the stack.
- Solver Networks: Require deep liquidity access across LSTs, DEXs, and restaking pools to fulfill intents profitably.
- Bridge Dominance: Cross-chain intent execution will be dominated by messaging layers (LayerZero, Axelar, Wormhole) with pre-positioned liquidity.
- Builder Play: Opportunity to build specialized solvers or liquidity provisioning protocols for this new market.
New Layer
Stack
Solver Fee
Value Capture
04
Risk Transference: From Slashing to Solver Insolvency
Removing the unbonding period doesn't eliminate risk; it transmutes it. The primary risk shifts from validator slashing to solver failure during atomic execution.
- New Risk Model: Users must trust the solver's ability to fulfill the intent or compensate them for failure.
- Insurance & Bonding: Successful networks will require solvers to post bonds or carry insurance, similar to Flashbots searchers.
- Audit Complexity: Smart contracts must be rigorously audited for cross-chain atomicity failures, a novel attack vector.
Risk Shift
Model Change
Solver Bond
Key Mechanism
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