Restaked Asset

These are the most common restaked assets. They are tokenized representations of a staked native asset (like ETH) that can be used in DeFi while still securing the underlying chain.

Examples:

• stETH (Lido Staked ETH)
• rETH (Rocket Pool ETH)
• cbETH (Coinbase Wrapped Staked ETH)

These tokens are deposited into a restaking contract to extend their cryptoeconomic security to other applications like Actively Validated Services (AVSs).

LRTs are a secondary layer of tokenization. They represent a user's position within a restaking protocol, which itself holds LSTs or native ETH.

Examples:

• ezETH (Renzo Protocol)
• rsETH (Kelp DAO)
• pufETH (Puffer Finance)

Holding an LRT provides exposure to the rewards from both the underlying staking and the additional rewards from securing AVSs, all in a single, liquid token.

Ethereum validators can opt-in to restaking directly by setting their withdrawal credentials to a restaking contract's address. This is a core mechanism of EigenLayer.

Key Points:

• Validators commit their entire 32 ETH stake to secure additional services.
• This is a native, non-tokenized form of restaking.
• It requires running validator software and carries slashing risks for the chosen AVSs.

Some restaking frameworks allow for generalized assets beyond staked ETH. These can include liquidity provider (LP) tokens from DEXs or tokens from other yield-generating strategies.

Concept:

• The yield or economic value of the asset is "restaked" as collateral.
• This expands the security budget beyond pure proof-of-stake chains.
• Implementation is more complex due to asset volatility and oracle requirements.

Restaked assets commonly secure Data Availability (DA) layers, which are critical for scaling solutions like rollups.

How it works:

• AVSs like EigenDA use restaked ETH or LSTs as collateral.
• Operators pledge this stake and can be slashed for malicious behavior (e.g., withholding data).
• This creates a cryptoeconomically secure DA layer without launching a new token.

Restaking enables decentralized sequencer sets for rollups, preventing censorship and MEV extraction by a single entity.

Mechanism:

• A committee of sequencers is selected, each backed by restaked assets.
• Malicious sequencing (e.g., transaction reordering) can result in slashing of the restaked collateral.
• This provides a trust-minimized alternative to a centralized sequencer.

Restakers are the capital providers who supply the security. They come in two primary forms:

• Operators: Node operators who run the software for AVSs and stake their assets directly to provide validation services.
• Delegators: Token holders who delegate their staked assets to trusted Operators, earning additional yield from AVS rewards while the Operator performs the technical work. This dual-role system allows for broad participation and efficient capital allocation.

Rollup and Layer 2 networks use restaked assets to secure critical components of their stack. For example, a rollup might use an AVS secured by restaked ETH for its sequencer decentralization or for a fast finality bridge back to Ethereum Layer 1. This provides stronger security guarantees than a standalone Proof-of-Stake system and creates a shared security marketplace where L2s can "rent" security from Ethereum's established economic base.

Projects providing oracle data (like price feeds) or other middleware services (like keeper networks) are key AVS users. By securing their service with restaked assets, they can offer cryptoeconomic slashing guarantees to their customers. For instance, an oracle that provides faulty data could have its operators' restaked assets slashed, creating a powerful financial disincentive for misbehavior and increasing the service's trustworthiness.

Cross-chain bridges and interoperability protocols are major adopters of restaking. These systems are high-value targets and require robust security. By becoming an AVS, a bridge can be secured by a large, diversified pool of restaked ETH instead of its own native token, which may have a smaller market cap or lower stake distribution. This significantly raises the cost of a successful attack, making the bridge more secure for users moving assets between chains.

While dApps do not directly integrate restaking protocols, they are end-users of the secured services. A DeFi protocol relies on oracles and bridges secured by restaked assets. A gaming dApp might depend on a high-throughput data availability layer that is secured as an AVS. By building on infrastructure with enhanced, economically backed security, dApps can offer their users stronger guarantees about liveness, correctness, and data integrity.

A restaked asset is subject to slashing penalties from multiple Actively Validated Services (AVS) simultaneously. A validator's misbehavior in one service can trigger slashing events that impact the entire restaked principal, not just the portion allocated to that service. This creates a correlated failure mode where a single fault can lead to disproportionate losses across the decentralized application (dApp) ecosystem relying on that security.

Delegators must place significant trust in the node operator they select. Risks include:

• Operator Fault: The operator's technical failure or malicious action leads to slashing.
• Centralization Pressure: Economic incentives favor large, established operators, reducing network resilience.
• Custodial Risk: In liquid restaking protocols, users often custody their liquid restaking tokens (LRTs) with a third-party protocol, introducing smart contract and custodial risks separate from the underlying consensus layer.

The security of a restaked asset is only as strong as the weakest Actively Validated Service (AVS) it secures. Key risks include:

• AVS Software Bugs: Faulty or exploitable AVS code can cause unintended slashing.
• Economic Design Flaws: Poorly calibrated slashing conditions or rewards in an AVS can destabilize the entire restaking ecosystem.
• Dependency Risk: The restaking layer's security is dependent on the continued correctness and liveness of multiple external AVS networks.

Restaking often involves lock-up periods and complex withdrawal cycles. Specific risks are:

• Capital Lockup: Native restaking on EigenLayer has a ~7-day withdrawal queue, impairing liquidity.
• LRT Depeg Risk: Liquid Restaking Tokens (LRTs) may trade at a discount to their underlying asset if redemption mechanisms are slow or perceived as risky.
• Withdrawal Front-Running: In decentralized systems, the timing and execution of withdrawals can be manipulated, potentially disadvantaging smaller participants.

Restaking creates new forms of systemic risk within the crypto-economic system:

• Over-Collateralization: The same economic security (staked ETH) is re-used across many systems, creating a web of interconnected liabilities. A major slashing event could have cascading effects.
• Yield Competition: The pursuit of restaking rewards may incentivize validators to over-extend to riskier AVSs, compromising the security-first principle of the base layer.
• Unproven Models: The long-term economic sustainability and security guarantees of large-scale restaking are still untested at scale.

Protocols and users employ several strategies to manage restaking risks:

• Diversification: Delegators can spread stakes across multiple operators and AVSs to reduce concentration risk.
• Slashing Insurance: Some protocols are exploring coverage pools to insure against slashing losses.
• AVS Audits & Monitoring: Rigorous audits of AVS code and real-time operator performance monitoring are critical.
• Gradual Permissionless Rollout: Protocols like EigenLayer are gradually increasing stake limits to test security assumptions under controlled conditions.