EigenLayer launched restaking in June 2023 with $1.1 billion in total value locked. By January 2025, restaking protocols collectively held over $18 billion—a 16x growth in 18 months. Why? Because restaking solves a fundamental problem: your staked assets just sit there earning one yield when they could be working multiple jobs.

Restaking lets you take crypto you've already staked (typically ETH securing Ethereum) and use those same assets to secure additional networks and services simultaneously. You're not unstaking—you're letting other protocols borrow your security guarantees. If regular staking is getting paid to lock up assets, restaking is getting paid twice (or more) for the same locked capital. The trade-off? More complexity, additional slashing risks, and trusting more protocols with your funds.

The core innovation isn't just yield farming—it's shared security. New networks need validators but bootstrapping security from scratch is expensive. Restaking lets them tap into Ethereum's $100+ billion security budget instead of building their own from zero.

How restaking actually works

You start with staked ETH—either running a validator or holding liquid staking tokens like stETH from Lido. That stake earns roughly 3-4% APY securing Ethereum.

With restaking, you deposit that staked ETH into a protocol like EigenLayer. Now your assets do double duty: still securing Ethereum AND simultaneously securing additional services called Actively Validated Services (AVS)—oracle networks, bridges, data availability layers, any crypto infrastructure needing validators.

The key mechanic: you're opting into additional slashing conditions. Normal staking slashes you for validator misbehavior—going offline, attacking the network. Restaking adds MORE slashing from each AVS you secure. Wrong oracle data? Slashed. Failed data availability? Slashed. More work, more risk, more rewards.

Liquid restaking tokens (LRTs) add another layer. Protocols like Ether.fi let you deposit stETH and receive eETH. These tokens remain tradeable and usable in DeFi while earning restaking rewards. You stack: base staking (layer 1) + restaking rewards (layer 2) + DeFi yield using your LRT as collateral (layer 3). Capital efficiency is undeniable, complexity and risk compound.

Why EigenLayer became the standard

EigenLayer solved the cold start problem for crypto security. Before restaking, launching a new oracle or bridge meant convincing validators to stake capital with you and trust your economics—massive coordination problem.

EigenLayer flipped this: Ethereum validators can opt into securing your service WITHOUT unstaking. New services tap into billions in existing security day one instead of starting from zero. By early 2025, over 400 AVS were live or in development—oracles, bridges, rollup sequencers, all sharing Ethereum's security budget.

The protocol uses "operators"—entities who run AVS software and accept slashing conditions. Regular users restake through EigenLayer without running infrastructure themselves. Operators do validation work, users earn portions of AVS rewards. EigenLayer TVL peaked around $18 billion, creating a marketplace for Ethereum's security.

The shared security revolution

Restaking changes how crypto infrastructure gets built. Before, every network needed to bootstrap its own validators and security model—expensive, slow, fragmented. Restaking introduces shared security: multiple services share the same security budget, like cloud computing versus running your own servers.

Oracles benefit: instead of building validator networks from scratch, an oracle AVS inherits Ethereum's security day one. Bridges benefit: instead of weak multisig security, get thousands of validators with billions in slashable capital. Data availability layers like EigenDA provide cheaper service than L1 Ethereum while maintaining strong security through restaked ETH.

Multiple yield streams explained

Concrete numbers: 32 ETH running a validator earns roughly 3.5% APY from Ethereum staking—about $3,360 per year at $3,000 per ETH.

Restake that 32 ETH through EigenLayer securing three AVS (oracle at 2%, bridge at 1.5%, DA layer at 1%). Your total APY becomes 8%—roughly $7,680 per year. Same capital, more than double the yield.

With liquid restaking you stack further. Deposit stETH into Ether.fi, receive eETH. Use eETH as collateral in Aave to borrow stablecoins, deploy those into yield farms. Base staking (3.5%) + restaking (4.5%) + DeFi yield (2% net) = 10% total from your original ETH position. Capital efficiency means making each dollar work multiple jobs simultaneously.

The risks—slashing, complexity, and smart contracts

More yield layers means more risk layers. Slashing risk multiplies: normal ETH staking has clear rules (don't sign conflicts, stay online, don't attack). Most honest validators never get slashed. With restaking, you add slashing conditions from every AVS you secure—wrong oracle data, invalid bridge messages, failed data storage. Each AVS has different rules and penalties. You're playing multiple games with different rulebooks.

Smart contract risk compounds. Normal staking trusts battle-tested Ethereum consensus code. Restaking adds trust layers: EigenLayer contracts, each AVS's contracts, liquid restaking protocols, DeFi protocols if using LRTs as collateral. Each contract is another attack surface. 2024-2025 saw close calls—critical bugs found before exploitation, but that's luck not certainty.

Complexity risk: most users delegate to operators who run AVS software. If your operator gets slashed, you get slashed too even if you did nothing wrong. You outsource technical work but not risk.

Centralization concerns: small number of professional operators run most AVS validation. If they went down or coordinated attacks, consequences cascade across dozens of services. Shared security is efficient but creates correlated failure modes.

Liquid restaking versus native restaking

Native restaking: you run an Ethereum validator and use EigenLayer's contracts to opt into securing AVS. Full control—you run nodes, choose AVS, manage keys. Rewards flow directly to you. This is for institutional stakers and sophisticated operators.

Liquid restaking: deposit staked ETH into protocols like Ether.fi or Puffer Finance, receive liquid restaking tokens (LRTs). The protocol handles everything—chooses AVS, manages operators, distributes rewards. You hold the LRT and earn blended yield.

LRTs trade control for liquidity and composability. You can trade eETH on DEXs, use it as collateral, provide liquidity—all while earning restaking rewards. Native restaking locks ETH in validators with less flexibility. By early 2025, maybe 80% of restaked capital went through LRT protocols. Most people prioritize liquidity over control and don't want to run validators. This creates concentration risk but makes restaking accessible.

Restaking beyond Ethereum

EigenLayer pioneered Ethereum restaking but the concept spread. Babylon brought Bitcoin restaking—BTC holders secure other networks without wrapping or moving Bitcoin off-chain. Solana launched protocols like Solayer letting staked SOL secure Solana-based AVS. Cosmos explored interchain security 2.0 where smaller chains pay larger chains to share validator sets.

Every proof-of-stake blockchain will likely develop restaking—it's too useful. Capital in staking could earn multiple yields, new services need security bootstrapping. Question isn't whether restaking expands, but which implementations prove secure and sustainable.

The future—400 AVS and growing

EigenLayer projects 400+ Actively Validated Services by end of 2025—oracles, bridges, data availability, rollup sequencers, keeper networks, ZK coprocessors, more. Any crypto infrastructure needing decentralized validation explores AVS to tap existing security.

The economic model evolves. Early AVS paid rewards in their own tokens—high yields attract mercenary capital that dumps and leaves. Newer AVS explore fee-based models where service users pay fees flowing to restakers, creating sustainable revenue not inflationary emissions.

Regulation is a wildcard. Are restaking rewards income or capital gains? Is restaking a security? Unclear rules could slow institutional adoption. Some protocols geo-fence U.S. users until regulations clarify.

Technical challenges remain. Slashing hasn't been tested at scale—what happens when major AVS slash thousands of restakers? How do liquidations work when restaked positions are leveraged in DeFi? Can contracts handle hundreds of AVS?

Despite risks, restaking's trajectory feels inevitable. It solves real problems—capital efficiency for stakers, security bootstrapping for builders, shared infrastructure for ecosystems. Your staked assets working overtime while you sleep through multiple yield streams.

References

1. EigenLayer Documentation - Official technical documentation for Ethereum restaking
2. QuickNode: The Restaking Revolution - Comprehensive guide to restaking mechanics and protocols
3. Coin Bureau: Liquid Restaking - Analysis of liquid restaking tokens and protocols
4. KuCoin Learn: What is Restaking - Beginner-friendly explanation of restaking concepts
5. EigenLayer TVL Data - DeFiLlama - Real-time total value locked statistics
6. Ether.fi Documentation - Liquid restaking protocol documentation
7. Babylon Bitcoin Restaking - Technical paper on Bitcoin restaking mechanisms
8. Messari: Restaking Research Report - In-depth market analysis and projections
9. Bankless: Risks of Restaking - Critical analysis of restaking risk factors
10. Dune Analytics: Restaking Dashboard - On-chain data visualization of restaking activity