What Is Restaking in Cryptocurrency? A Clear Guide to Earning More Yield on Staked ETH

Posted By Tristan Valehart    On 21 Nov 2025    Comments (18)

What Is Restaking in Cryptocurrency? A Clear Guide to Earning More Yield on Staked ETH

Restaking Yield Calculator

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Your Potential Returns

Standard Staking APY

3.5%

Restaking APY

10.0%

Estimated Annual Earnings: $0.00
Estimated Annual Earnings: $0.00
Risk Level: Low Risk

Note: These are estimated values based on current market conditions. Actual returns may vary.

Restaking carries additional risk including slashing events. Always research the AVSs you're securing.

Imagine you’ve staked your Ethereum to help secure the network and earn 4% yearly rewards. Now, what if you could use that same staked ETH to help secure dozens of other blockchain services - and earn another 5% to 8% on top of it? That’s restaking. It’s not just a new buzzword. It’s a fundamental shift in how blockchain security and rewards work - and it’s already locking up over $20 billion in Ethereum as of October 2024.

How Restaking Works: Staking Once, Securing Many

Traditional staking means you lock up your ETH to validate transactions on Ethereum. You earn rewards, but your stake only helps Ethereum. Restaking changes that. It lets you reuse your staked ETH to secure other protocols - called Actively Validated Services (AVSs) - without withdrawing or selling your original stake.

This is made possible by EigenLayer, the first and still dominant restaking protocol. Launched in March 2024, EigenLayer acts like a middleman. When you restake, you’re not moving your ETH. Instead, you’re giving EigenLayer permission to use your existing staking power to validate extra services. Think of it like lending your car’s engine to power a second vehicle while still using it for your daily commute.

There are two main ways to restake:

  • Native restaking: You run your own Ethereum validator node (requires 32 ETH and technical setup) and add EigenLayer software to it. You directly extend your validator’s duties to multiple AVSs.
  • Liquid restaking: You use a liquid staking token (LST) like eETH from Ether.Fi or ezETH from Renzo. These tokens represent your staked ETH, and you can restake the token itself. It’s easier, more flexible, and doesn’t require running a node.

Either way, your ETH stays locked in Ethereum’s staking contract. But now, it’s also helping secure services like decentralized oracles, privacy layers, or even new rollups - all while earning extra rewards.

Why Restaking Matters: The Capital Efficiency Breakthrough

Before restaking, every new blockchain protocol had to build its own security from scratch. That meant attracting validators, paying them, and managing slashing risks - all expensive and slow. Restaking solves this by letting Ethereum’s massive security base (over $70 billion staked as of late 2024) be shared across many projects.

This is called pooled security. Instead of 100 small networks each trying to secure themselves, you have one strong layer - Ethereum - backing dozens of smaller ones. It’s like a single power grid supplying energy to hundreds of homes, instead of each house needing its own generator.

The result? AVSs can offer higher yields to attract restakers. While standard Ethereum staking pays 3-5% APY, restaking can push total returns to 8-12% APY, according to Kraken’s 2024 research. That’s not magic. It’s market efficiency. AVSs pay for security with yield, and restakers choose where to allocate their stake based on risk and reward.

For users, this means more income without more capital. For the ecosystem, it means faster innovation. New DeFi apps, privacy tools, and cross-chain bridges can launch without needing to bootstrap their own validator networks.

The Hidden Risks: Slashing and Systemic Exposure

Restaking isn’t free money. It comes with serious trade-offs.

Every time you restake, you accept additional slashing conditions. Slashing means losing part of your stake if you misbehave - like going offline or signing invalid data. Ethereum’s native slashing is strict but predictable. AVSs can add their own rules. One AVS might slash 0.5% for a 10-minute outage. Another might slash 100% for a single bad signature.

Here’s the real danger: combinatorial slashing risk. If you restake with five AVSs, you’re now exposed to five different slashing rules. A small node glitch could trigger penalties across all of them. One Reddit user lost $1,200 in ETH after a brief connectivity issue triggered a 0.5% slash from one AVS. That’s not rare.

And it gets worse. If an AVS you’re securing gets hacked or fails, the damage can ripple. Since EigenLayer holds the withdrawal credentials for restaked ETH, a compromised AVS could theoretically trigger mass slashing - even if Ethereum itself is fine. The Ethereum Foundation warned in April 2024 that restaking could concentrate risk across protocols, making the whole system more fragile.

Liquid restaking adds another layer of complexity. If your LRT (like eETH) is used as collateral in DeFi lending protocols, a drop in its value could trigger cascading liquidations. That’s why S&P Global called it a potential ‘systemic risk multiplier’ in mid-2024.

A friendly validator robot channels energy from an Ethereum core to small houses representing AVSs in a magical power grid landscape.

Who’s Using Restaking - And Why

Restaking isn’t for everyone. It’s mostly used by:

  • Large ETH holders: Entities with 1,000+ ETH account for 68% of all restaked value, according to Glassnode.
  • Professional validators: Those who already run nodes and want to maximize yield.
  • DeFi-savvy retail users: Those comfortable with LSTs and willing to manage risk.

Most users (about 65%) avoid running their own nodes. Instead, they delegate their restake to operators - third parties who manage the technical side for a 5-10% fee. It’s like hiring a property manager: you earn the rent, but pay someone to fix the leaks.

Restaking’s biggest appeal? You don’t need to buy more ETH to earn more. Your existing stake becomes more productive. For someone with 32 ETH, that’s an extra $500-$1,200 a year in rewards - all without touching your original balance.

Market Landscape: Who’s Leading and What’s Coming

As of October 2024, EigenLayer controls 89% of the restaking market. The rest is split between Renzo Protocol (5.2%), EtherFi (3.8%), and Puffer Finance (1.5%).

But the market is evolving fast. EigenLayer just announced a major update for Q4 2024: a reputation system for validators and a cap on how much security any single AVS can claim. Now, no AVS can take more than 5% of the total restaked ETH - a direct response to fears of over-concentration.

Meanwhile, liquid restaking tokens (LRTs) are growing. CoinGecko predicts that by 2025, 40% of all restaked value will come through LRTs. That means more people will be able to restake without running nodes - but also more exposure to DeFi risks.

Regulators are watching. The U.S. SEC said in October 2024 that some restaking arrangements ‘may constitute securities offerings.’ That could mean compliance headaches for platforms offering restaking services. In the U.S., this might slow adoption among retail users.

A nervous user chooses between a safe path with a reward fairy and a stormy risk tunnel labeled 'Slashing' in a storybook crossroads scene.

Should You Restake? A Simple Checklist

Restaking can boost your yield - but only if you understand the risks. Ask yourself:

  1. Do you already stake ETH? If not, start with standard staking first.
  2. Are you comfortable with DeFi tools? Restaking requires using wallets, tokens, and protocols outside of simple staking dashboards.
  3. Can you monitor your node or LRT? Even small outages can trigger slashing.
  4. Do you know which AVSs you’re securing? Research their track record. Avoid ones with poor documentation or unknown teams.
  5. Are you okay with potential losses? A 10% slash on $10,000 is $1,000 gone - permanently.

If you answered yes to all five, restaking could be worth exploring. Start small. Use a trusted LRT like eETH or ezETH. Don’t rush into native restaking unless you’re a seasoned node operator.

What’s Next for Restaking?

Restaking is still young. But its core idea - reusing security capital - is too powerful to fade. Experts like Harvard Business Review predict it will become a foundational part of Ethereum’s ecosystem, if risk management catches up.

Future developments will likely focus on:

  • Better risk dashboards that show your exposure across all AVSs
  • Insurance protocols that cover slashing losses
  • More user-friendly interfaces for liquid restaking
  • Regulatory clarity from major markets like the U.S. and EU

By 2026, analysts at Blockworks project restaking could reach $100 billion in total value locked - nearly a third of all staked ETH. That’s not a fantasy. It’s a logical next step in blockchain’s evolution.

Restaking turns your staked ETH from a passive asset into an active tool. It’s not without danger. But for those who understand it, it’s one of the most powerful ways to make crypto work harder for you.

Is restaking the same as liquid staking?

No. Liquid staking lets you trade your staked ETH for a token (like stETH or eETH) that you can use in DeFi. Restaking takes that token - or your original ETH stake - and uses it to secure other blockchain services. Liquid staking gives you liquidity. Restaking gives you extra yield and security duties.

Can I lose my ETH with restaking?

Yes. If you violate the slashing rules of any AVS you’re securing, you can lose part or all of your restaked ETH. This isn’t theoretical - users have already lost hundreds or thousands of dollars from node outages or misconfigurations. Restaking multiplies your risk exposure.

Do I need 32 ETH to restake?

Only if you want to do native restaking - running your own validator. For liquid restaking, you can use any amount of ETH through platforms like EtherFi or Renzo. You just need enough to buy an LRT (liquid restaking token), which can be as little as 0.1 ETH.

Is restaking safe for beginners?

Not really. Restaking requires understanding node operation, slashing conditions, and DeFi risks. Beginners should start with standard staking and learn the basics before moving to restaking. Even experienced users treat it with caution - it’s not a set-and-forget system.

What’s the difference between EigenLayer and other restaking protocols?

EigenLayer is the original and dominant protocol, controlling 89% of the market. Others like Renzo and EtherFi offer similar services but focus on liquid restaking through LRTs. EigenLayer supports both native and liquid restaking, while competitors are mostly LRT-only. EigenLayer also has the most AVSs and the most advanced risk controls.

How do I start restaking?

For most users, start with a liquid restaking platform like EtherFi or Renzo. Connect your wallet, deposit your ETH or LST (like stETH), and select the restaking option. You’ll get an LRT like eETH or ezETH that automatically earns extra yield. No node setup needed. Always research the AVSs your LRT supports before committing.

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