Restaking is the 2024 invention that let already-staked ETH be “re-staked” to secure additional networks, earning extra yield in exchange for accepting additional slashing conditions. EigenLayer is the primary restaking protocol; ether.fi, Renzo, Kelp and Puffer are the liquid restaking layers that sit on top.
The sector grew from zero to billions in TVL inside a year, making it one of the fastest-scaling new narratives in DeFi history. The tokens associated with it have had sharp rallies and sharp drawdowns as the sustainability of the extra yield has been debated.
For the foundation layer see the liquid staking sector.
How restaking actually works
The base case: you hold ETH, you stake it with a validator, you earn 3-4% APY for securing Ethereum. With restaking, you deposit your already-staked ETH (or a liquid staking token like stETH) into EigenLayer. EigenLayer then lets “Actively Validated Services” (AVSs) — other networks, oracle services, bridges, data availability layers — pay you additional yield in exchange for you accepting their slashing conditions on top of Ethereum’s.
If one of those AVSs has a fault condition you help trigger, your restaked ETH gets slashed. That’s the extra risk you accept for the extra yield. Supported AVSs include EigenDA (Ethereum’s native data-availability service for rollups), AltLayer, Lagrange, Witness Chain, and others.
The liquid restaking layer
Most users don’t directly restake. Instead they deposit into a liquid restaking token (LRT) protocol which handles the technical complexity:
- ether.fi (ETHFI): largest LRT by TVL. Issues eETH, a yield-bearing receipt token. Native restaking (users own their validator keys, not pooled).
- Renzo (REZ): issues ezETH. Strategy-based: actively allocates deposits across AVSs based on risk/reward assessment.
- Kelp DAO (KEP): issues rsETH. Multi-chain focus with deep DeFi integrations.
- Puffer (PUFFER): issues pufETH. Slashing-resistant design via anti-slashing hardware.
- Swell: issues rswETH. Distinguished by its own L2 rollup built on restaking security.
The yield sustainability debate
EigenLayer’s total addressable yield comes from what AVSs are willing to pay for security. In the early months, yield was inflated by protocol incentives (airdrops, points programmes). As those subsidies wind down, the question is whether AVS demand can sustain meaningful yields on top of the base ETH staking return.
The bear case: most AVSs are early-stage, revenue-light, and over-paying for security they may not critically need. If those subsidies dry up, restaking yields compress toward low single digits (above base staking rate but by much less than advertised).
The bull case: as more high-value infrastructure migrates to shared-security models, AVS demand grows faster than restaked supply, and yields stabilise at meaningful premiums.
Risks specific to the sector
Restaking stacks risks: Ethereum slashing risk (same as regular staking), AVS-specific slashing risk (new), LRT protocol smart-contract risk, and peg risk on the LRT itself (eETH, ezETH, rsETH can depeg from ETH under stress — see the Kelp DAO exploit of April 2026 as a live case study).
These tokens have been the most volatile corner of ETH-adjacent DeFi. Size accordingly, and don’t concentrate across LRTs hoping for diversification — their correlations are near 1 during drawdowns.
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