Native Staking vs Restaking: Security Risk

Isolated Risk: Slashing penalties (e.g., Ethereum's 1-100% of stake) are contained to the native chain. This matters for protocols that require regulatory clarity and simple, auditable security models. The economic security is directly proportional to the chain's native token market cap.

Direct Alignment: Validators secure only one set of consensus rules (e.g., Ethereum's LMD-GHOST). This matters for maximizing liveness and censorship resistance for the base layer, as seen with clients like Prysm, Lighthouse, and Teku. There is no external protocol dependency.

Multiplier Effect: The same stake (e.g., ETH via EigenLayer) can secure multiple Actively Validated Services (AVS) like alt-DA layers (EigenDA) and oracle networks. This matters for bootstrapping security for new protocols without minting a new token, offering potentially 10-100x higher yield for operators.

Composable Trust: Allows protocols to outsource cryptoeconomic security, focusing development on core logic. This matters for rollup sequencers, bridges (like Lagrange), and keeper networks that want Ethereum-level security without being an L1. Enables a marketplace for security.

Cascading Failure: A slashing event or correlated AVS failure on a restaking platform can trigger unbounded, cross-protocol slashing. This matters for protocols where tail-risk management is critical. The security of your AVS is now tied to the weakest AVS in the pool.

Third-Party Dependence: Security now depends on the restaking platform's operator set, governance (EigenLayer's Ecosystem Security Council), and slashing logic. This matters for protocols that prioritize sovereignty and minimization of attack surfaces. Adds a layer of intermediation risk.

Direct Slashing & Consensus Security: Slashing penalties are enforced by the base layer's consensus (e.g., Ethereum's Casper FFG). This creates a $100B+ economic security pool directly protecting the L1. Ideal for protocols requiring maximum, battle-tested finality.

Capital Inefficiency & Limited Utility: Capital is siloed to securing a single chain. A validator's 32 ETH stake cannot be used to secure other services like AVSs (e.g., EigenDA, Omni Network). This is a major drawback for operators seeking yield aggregation.

Capital Efficiency & Shared Security: Enables staking derivatives (e.g., stETH, cbETH) to be restaked to secure multiple Actively Validated Services (AVSs). This creates a flywheel, attracting more AVSs like AltLayer and increasing utility for staked capital.

Complex Slashing & Systemic Risk: Introduces additional slashing conditions defined by each AVS, increasing validator operational risk. Correlated failures across AVSs could lead to cascading slashing events, a novel systemic risk not present in native staking.

Risk Containment: Slashing penalties are confined to the native chain (e.g., Ethereum). A validator failure only impacts its own staked ETH (~32 ETH). This matters for protocols requiring maximum capital preservation and predictable, bounded risk.

Proven Model: Ethereum's Proof-of-Stake has secured over $100B+ in TVL since the Merge, with slashing events being extremely rare and predictable. This matters for institutions and long-term holders who prioritize stability and a mature, audited codebase over novel yield.

Risk Amplification: A single validator's stake can be simultaneously slashed across multiple Actively Validated Services (AVSs) like EigenDA, Omni, and Lagrange. A failure in one AVS can cascade, leading to total loss of the restaked principal. This matters for yield-seekers who must model correlated failure modes.

Novel Attack Vectors: Introduces dependency on EigenLayer's smart contracts and the performance of chosen Node Operators. A bug in an AVS or malicious operator collusion could lead to slashing beyond the base layer's rules. This matters for teams evaluating new dependencies and their associated audit history and operator reputation.

Isolated Slashing Risk: Validator penalties are confined to the native chain (e.g., Ethereum's Beacon Chain). A slashing event on Lido or Rocket Pool does not cascade to other protocols. This matters for risk-averse institutions managing sovereign treasury assets.

Clear Yield Source: Rewards are derived solely from the protocol's native inflation and transaction fees. There is no dependency on the performance or solvency of external Actively Validated Services (AVSs) like EigenLayer or Babylon. This matters for long-term, stable yield strategies.

Slashing Amplification: A single validator fault can be slashed across multiple AVSs simultaneously (e.g., EigenLayer, Omni Network, Lagrange). This creates correlated failure modes. This matters for protocol architects whose dApp depends on multiple restaked services, as one slashing can cripple the entire stack.

Expanded Attack Surface: Security now depends on the correctness and vigilance of AVS operators and their code. A bug in an EigenLayer module or malicious operator collusion poses a direct threat to principal. This matters for techo-economic designers evaluating new dependencies beyond the base layer's security.