Native ETH Restaking (e.g., EigenLayer) excels at maximizing capital efficiency and security by allowing a single 32 ETH validator stake to secure multiple AVS networks simultaneously. This creates a powerful, unified security layer. For example, a single validator can concurrently secure an oracle network like eoracle, a data availability layer like EigenDA, and a decentralized sequencer set, all while earning native Ethereum staking rewards plus additional AVS rewards.
LABS
Comparisons
Native ETH Restaking vs. LST Restaking
A technical analysis for infrastructure decision-makers comparing the core trade-off between the capital efficiency of Liquid Staking Token restaking and the protocol-native security of direct ETH restaking.
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introduction
THE ANALYSIS
Introduction: The Core Restaking Dilemma
A foundational comparison of the two primary methods for securing Actively Validated Services (AVS): direct staking of native ETH versus leveraging liquid staking tokens.
LST Restaking (e.g., using stETH or rETH) takes a different approach by enhancing liquidity and accessibility. Users can restake their liquid staking tokens without locking their principal, enabling participation in DeFi yield strategies on platforms like Aave or Curve while still securing AVSs. This results in a trade-off: while it offers superior flexibility and composability, it introduces smart contract and liquidity risks from the underlying LST protocol (e.g., Lido, Rocket Pool) on top of the AVS risk.
The key trade-off: If your protocol's priority is maximizing cryptoeconomic security and minimizing systemic dependencies, choose Native ETH Restaking. If you are building for users who prioritize capital fluidity and DeFi composability, choose LST Restaking. The choice fundamentally dictates the risk profile and user experience of your AVS.
tldr-summary
NATIVE ETH RESTAKING VS. LST RESTAKING
TL;DR: Key Differentiators at a Glance
A direct comparison of the two primary restaking approaches, highlighting their core strengths and trade-offs for protocol architects and engineering leads.
01
Native ETH: Maximum Security & Simplicity
Direct validator control: Stake and restake your own 32 ETH validator, interacting directly with the Ethereum consensus layer. This provides the highest degree of trust minimization and sovereignty. This matters for protocols like EigenLayer AVSs where slashing guarantees must be cryptographically verifiable back to the base layer.
02
Native ETH: Capital Efficiency for Validators
No double-layer dilution: Your staking rewards and restaking rewards are accrued on the same principal, avoiding the yield-drag inherent in LSTs. This matters for large-scale node operators (e.g., Figment, Staked) managing their own infrastructure, where maximizing return on locked capital is critical.
03
LST Restaking: Liquidity & Accessibility
Unlocked capital: Use liquid staking tokens like Lido's stETH, Rocket Pool's rETH, or Coinbase's cbETH to restake any amount, bypassing the 32 ETH minimum and unbonding period. This matters for DAO treasuries (e.g., Aave DAO) or retail participants seeking to participate in restaking without operating a validator.
04
LST Restaking: Composability & Yield Stacking
Inherent DeFi integration: LSTs are already money-legos. You can deposit stETH into Aave as collateral, use it in Curve pools, and restake it simultaneously. This matters for sophisticated yield strategies and protocols that want to bootstrap TVL quickly by tapping into the ~$50B+ LST ecosystem.
05
Native ETH: Lower Protocol Risk
No dependency on LST issuers: Eliminates smart contract and centralization risks associated with LST providers (e.g., governance attack on Lido). Your security is solely a function of Ethereum's consensus. This matters for risk-averse institutions and protocols where a failure of the LST bridge would be catastrophic.
06
LST Restaking: Higher Systemic Complexity
Added attack surface: Introduces dependency on the LST's security model and withdrawal mechanisms. A slashing event or bug in the LST contract (see 2022 stETH depeg) compounds risk. This matters for security-focused architects who must map and justify every additional trust assumption in their stack.
NATIVE ETH RESTAKING VS. LST RESTAKING
Head-to-Head Feature Comparison
Direct comparison of capital efficiency, risk, and operational complexity for restaking strategies.
| Metric | Native ETH Restaking (e.g., EigenLayer) | LST Restaking (e.g., Lido stETH, Rocket Pool rETH) |
|---|---|---|
Capital Efficiency | ~100% (Stake & Restake same ETH) | ~90-95% (Stake ETH, Restake LST) |
Smart Contract Risk Exposure | Primary (EigenLayer contracts) | Layered (LST + Restaking contracts) |
Liquidity Post-Restake | Illiquid (ETH locked) | Liquid (LST remains tradeable) |
Protocol Dependence | Ethereum + Restaking Protocol | Ethereum + LST Protocol + Restaking Protocol |
Slashing Risk | Ethereum + AVS penalties | Ethereum + LST + AVS penalties |
Typical Yield (Est.) | Base Staking + AVS Rewards | Base LST Yield + AVS Rewards |
Exit Timeline | Ethereum Unstaking Period (~days) | Instant (Sell LST) or Unstaking Period |
pros-cons-a
NATIVE ETH VS. LIQUID STAKING TOKENS
Native ETH Restaking: Pros and Cons
A technical breakdown of the core trade-offs between direct restaking and using liquid staking tokens (LSTs) like stETH or rETH.
01
Native ETH: Maximum Security & Yield
Direct slashing risk: Operators face native ETH slashing, creating the strongest cryptoeconomic security for AVSs like EigenLayer. This matters for high-value, trust-minimized services like decentralized sequencing or bridges.
Full reward capture: Earns 100% of the AVS rewards and EigenLayer points without LST protocol fees (~10% on Lido).
02
Native ETH: Protocol Simplicity
No dependency risk: Eliminates smart contract and depeg risk from LST providers (e.g., Lido, Rocket Pool). This matters for protocols prioritizing minimal external dependencies.
Direct integration: Interacts solely with Ethereum consensus and EigenLayer contracts, simplifying security audits and operational logic.
03
LST Restaking: Capital Efficiency & Liquidity
Preserved DeFi composability: Restake stETH/rETH while using it as collateral in Aave, Maker, or other money markets. This matters for protocols and users requiring leveraged staking strategies.
Immediate liquidity: Avoids the 7-day unstaking delay for native ETH, enabling faster capital reallocation.
04
LST Restaking: Accessibility & Scale
Lower barrier to entry: Users can restake with any amount of stETH/rETH, bypassing Ethereum's 32 ETH validator minimum. This matters for attracting broader, retail-friendly participation.
Leveraged TVL growth: Taps into the existing $40B+ LST market, accelerating EigenLayer's total value secured (TVS) faster than native ETH alone.
pros-cons-b
Native ETH vs. Liquid Staking Tokens
LST Restaking: Pros and Cons
Key strengths and trade-offs for CTOs evaluating restaking infrastructure.
01
Native ETH Restaking: Capital Efficiency
Direct exposure to Ethereum consensus: Stake 32 ETH natively via EigenLayer. This eliminates the smart contract risk of an LST intermediary like Lido's stETH or Rocket Pool's rETH. Critical for protocols prioritizing maximizing security guarantees for their AVS (Actively Validated Service).
32 ETH
Minimum Stake
02
Native ETH Restaking: Protocol Simplicity
Simplified slashing logic: Slashing penalties are applied directly to the validator's stake, governed by Ethereum's core protocol. This avoids the layered complexity of LST slashing mechanisms, reducing integration and audit overhead for AVS developers building on EigenLayer.
03
LST Restaking: Liquidity & Composability
Unlock capital while securing AVSs: Restake LSTs like stETH, rETH, or cbETH to earn dual yields while using the token in DeFi (e.g., as collateral on Aave, Maker). This is essential for protocols whose users demand high capital flexibility and want to participate in restaking without locking ETH.
$30B+
LST TVL
04
LST Restaking: Lower Barrier to Entry
No 32 ETH minimum: Users can restake any amount of an LST, democratizing access to AVS rewards. This significantly expands the potential restaking pool for your service. Ideal for AVSs seeking broader, more decentralized operator sets beyond large ETH validators.
CHOOSE YOUR PRIORITY
Decision Framework: When to Choose Which
Native ETH Restaking for DeFi
Verdict: The default for maximum security and composability. Strengths: Direct integration with EigenLayer and AVSs provides the deepest security guarantees and highest yield potential for native DeFi primitives. Protocols like Renzo Protocol and Puffer Finance leverage this for their core vaults. The lack of an intermediary token simplifies smart contract logic for complex integrations (e.g., using restaked ETH as collateral in Aave or MakerDAO). Trade-offs: Capital is locked and illiquid in the restaking contract, requiring careful liquidity management. Slashing risks are borne directly.
LST Restaking for DeFi
Verdict: Superior for liquidity and capital efficiency. Strengths: Using liquid staking tokens (LSTs) like Lido's stETH, Rocket Pool's rETH, or Coinbase's cbETH preserves liquidity. You can deposit the LST into EigenLayer while simultaneously using it in DeFi pools (e.g., Curve, Aave, Balancer). This enables leveraged yield strategies. Protocols like Kelp DAO and Ether.fi's eETH are built on this model. Trade-offs: Introduces dependency risk on the LST provider's security and oracle. Yield is diluted by the LST's base staking reward.
verdict
THE ANALYSIS
Final Verdict and Strategic Recommendation
A data-driven breakdown to guide infrastructure decisions between native and liquid staking token (LST) restaking.
Native ETH Restaking excels at capital efficiency and protocol alignment because it directly secures the Ethereum beacon chain and EigenLayer with the same asset, eliminating intermediary token risk. For example, protocols like EigenLayer and EigenDA are natively optimized for this model, which commands a significant share of the ~$15B+ restaking TVL. This direct integration minimizes smart contract exposure and aligns incentives with Ethereum's core security, making it the preferred choice for risk-averse, long-term validators.
LST Restaking (e.g., stETH, rETH, cbETH) takes a different approach by unlocking liquidity and enabling composability. This results in a trade-off: you gain immediate deployable capital in DeFi protocols like Aave, Compound, or Curve, but you introduce an additional layer of smart contract and oracle dependency from the LST provider (Lido, Rocket Pool, Coinbase). The ~$40B+ LST market provides immense flexibility, allowing you to earn staking yields while using the derivative for leverage or collateral elsewhere.
The key trade-off is Security Simplicity vs. Capital Flexibility. If your priority is maximizing the security budget for your AVS (Actively Validated Service) with minimal systemic risk, choose Native ETH Restaking. This is ideal for protocol architects building critical infrastructure like AltDA layers or cross-chain bridges. If you prioritize maximizing yield extraction and maintaining liquidity for your staked assets, choose LST Restaking. This suits DeFi-native teams or protocols that need to use capital actively within ecosystems like Ethereum L2s or Cosmos app-chains.
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