What Is Restaking? A 2025 Guide to the New Meta Sparked by EigenLayer

What is the most valuable resource in the world of crypto? It’s not a token. It’s not a blockchain. It’s trust. More specifically, it is the decentralized economic trust that is provided by the validators of the Ethereum network. What if we could leverage that trust to secure more than just Ethereum?

Restaking is a mechanism that allows Ethereum validators to make their staked ETH more useful by committing to secure protocols or services other than the Ethereum network itself. EigenLayer is the protocol that has pioneered this concept, operating as a decentralized marketplace for trust.

Eigencloud Token bio. Source: CoinStats

This article will provide a clear explanation of the concept of restaking, exploring how it works, the new possibilities it unlocks, and the potential risks of this powerful new primitive. EigenLayer has grown to $17.6 billion in TVL in 2025, which clearly validates the idea of restaking, cementing its role as one of the most significant innovations in DeFi.

The Problem: The High Cost of Security

Bootstrapping a New Network

For years, participants in Ethereum’s proof-of-stake system encountered a critical constraint. In order to earn staking rewards and help secure the network, they had to lock their ETH, effectively making it unavailable for other productive uses. This capital lock-up introduced what is known as an opportunity cost, significantly reducing capital efficiency across decentralized finance (DeFi) and limiting participation even for traders who wanted to buy ETH.

Traditional approaches required new protocols to offer substantial rewards to attract validators, competing with established networks for limited validator resources. This created a loop, as projects needed security to attract users, but needed users to justify paying for security.

The Solution: Renting Security from Ethereum

The Core Idea of EigenLayer

EigenLayer is a decentralized marketplace for trust. It allows new protocols to effectively rent security from the existing set of Ethereum validators, serving as a cheaper and more efficient way for a new protocol to get the security it needs. This is done by extending Ethereum’s robust security model, allowing other protocols to benefit from billions of dollars in staked ETH.

EigenLayer aims to create a restaking marketplace, where protocols can buy pooled security from validators, while validators can sell pooled security to protocols. This two-sided marketplace fundamentally changes the economics of blockchain security.

How it Works for Stakers

Stakers can choose to opt in to EigenLayer and select which other protocols they want to help secure. This enables them to delegate their staked ETH to validators and benefit from additional staking rewards.

Most users will delegate their restaked ETH to Operator entities running the specialized software required by AVSs. Operators validate data, perform sequencing functions, or handle other critical tasks based on AVS requirements. In return for taking on additional risk, stakers can earn additional yield. This serves as a way to earn crypto rewards beyond base staking.

EigenLayer offers several methods for restaking, allowing validators to maximize their staked assets:

1. Native Restaking – Validators restake their directly staked ETH.

2. LSD Restaking – Validators restake assets that are already staked through liquid staking providers, such as Lido or Rocket Pool.

3. LSD LP Restaking – Validators restake LP tokens that include a liquid-staked ETH token as part of the pair.

4. ETH LP Restaking – Validators restake LP tokens that include ETH as part of the liquidity pair.

Each option provides different ways for validators to participate and earn additional yield while leveraging their existing staked holdings.

How it Works for Protocols

Actively Validated Service (AVS), launched in 2024, can tap into the massive pool of economic security provided by the ETH that has been restaked on EigenLayer. Protocols that look to integrate EigenLayer will be able to leverage Ethereum’s highly secure trust network.

EigenLayer and Eth Restaking. Source: CoinGecko

These protocols can kick-start their launch with much less cost, since they do not have to bootstrap an entire validator set through reward incentives.

Actively Validated Services can range from sidechains, data availability layers, new virtual machines, oracle networks, bridges, execution environments, and more. This flexibility enables a vast array of applications that would have been economically impractical before restaking.

The New Meta: A Cambrian Explosion of Innovation

The Possibilities

Restaking opens up a huge new design space for crypto innovation. It will allow for the creation of a whole host of new protocols and services that would have been too expensive to secure on their own.

EigenLayer’s restaking mechanism leverages two fundamental ideas to overcome previous challenges: pooled security and free-market dynamics. These mechanisms allow Ethereum’s base layer security to extend to any AVS built on EigenLayer, overcoming previous inefficiencies and enhancing system robustness.

Examples of AVS categories include data availability layers that store and provide access to blockchain data more cheaply than the Ethereum mainnet, decentralized sequencers that order transactions for rollups without centralized control, oracle networks that bring off-chain data on-chain with economic guarantees, bridge services that facilitate cross-chain asset transfers with enhanced security, and keeper networks that automate smart contract execution and maintenance tasks.

EigenLayer restaking architecture. Source: EigenLayer

The innovation enabled by restaking extends beyond just reducing costs. Restaking also lowers the marginal capital costs of validator services since stakers can restake the same initial capital across many different protocols beyond native Ethereum.

The Risks: The Dangers of Leveraged Security

Systemic Risk

The biggest risk of restaking is the potential for systemic risk. Any individual AVS may be appropriately staked to the desired level of economic security. But if the same stake is restaked at several AVSs by the same validator, the cumulative gain from malicious behavior may exceed the loss from slashing. Preventing such network-level vulnerabilities is a critical challenge for EigenLayer.

Critics warn that if restaked assets flow repeatedly through lending loops or derivative stacks, any breach can cascade across protocols, causing rapid, collaborative losses. This concentration of risk becomes especially concerning if AVS and restaking utilities start overlapping, magnifying, slashing, or exploiting fallout.

If a large number of validators are all restaking to the same set of protocols, a bug or exploit in one of those protocols could lead to a cascade of slashing events that could threaten the stability of the entire Ethereum network. This creates correlation risk that doesn’t exist when validators are only securing Ethereum.

Additional Slashing Risk

Restaking introduces additional slashing conditions since your staked Ether will be securing and validating additional protocols. Depending on the protocol’s terms, slashing poses the risk of significant asset loss for network validators who may breach the rules.

Within EigenLayer’s system, validators who choose to restake their ETH are under slashing conditions for the Ethereum base layer and the additional AVSs they wish to support. If a validator has been found guilty of malicious action regarding an AVS, some portion of such a restaked ETH can be slashed.

The slashing risk compounds with each additional AVS. Each additional AVS increases complexity and, by extension, slashes vulnerability. A mistake in one AVS environment could ripple across others, exponentially increasing risk exposure.

Complexity Risk

Restaking is a very new and complex system. There is a risk of unforeseen bugs or economic exploits. Stakeholders must be aware of the risks, including potential smart contract vulnerabilities and slashing events.

Technical risks associated with participating in restaking include risks associated with error or security failures, including smart contract failure, hacks, network critical delays, or exploits, whether or not related to blockchain protocols. These technical risks are amplified by the novelty of the system and the complexity of coordinating across multiple protocols.

Liquidity Risk

In addition to the unbonding period for Ethereum, there is a seven-day lock-up when exiting from EigenLayer restaking. This additional unbonding period reduces liquidity for restakers, meaning capital is locked for longer periods than standard Ethereum staking.

During periods of market volatility or when validators want to exit positions quickly, this extended unbonding period creates opportunity costs and potential losses. The liquidity constraints must be carefully weighed against the additional yield potential.

Mainstream Accessibility

Kraken, through its subsidiary Staked, integrated EigenLayer restaking into its platform, enabling users to redeploy their already-staked ETH into restaking with just a few clicks. This unlocks extra rewards while preserving asset ownership on-platform. This integration significantly widens access to compound yield opportunities, making restaking more approachable for mainstream users.

The involvement of major centralized exchanges demonstrates that restaking has moved beyond being a niche DeFi primitive to becoming a mainstream yield-generating strategy. This accessibility, combined with user-friendly interfaces, will likely accelerate adoption while potentially introducing new categories of users who may not fully understand the additional risks they’re taking on.

Conclusion

Restaking is one of the most exciting and important innovations in crypto. It has the potential to unlock a new wave of permissionless innovation by dramatically reducing the cost of bootstrapping new protocols and services. The ability to rent security rather than build it from scratch fundamentally changes the economics of blockchain development.

However, restaking is also a powerful and dangerous new primitive that must be approached with caution. The additional slashing risks, systemic correlation risks, complexity risks, and liquidity constraints are real and significant. The full implications of leveraged security across multiple protocols are still being discovered, and unforeseen risks will likely emerge as the ecosystem matures.

The restaking revolution represents a fundamental shift in how we think about blockchain security and capital efficiency. As the ecosystem continues to evolve, careful monitoring of risks and continuous improvement of safety mechanisms will be essential to ensuring that restaking delivers on its promise without introducing unacceptable systemic vulnerabilities.

FAQ

What is restaking?
Restaking is the process of taking already staked Ethereum or liquid staking tokens and committing them to secure additional decentralized protocols beyond Ethereum’s base layer.

What is EigenLayer?
EigenLayer is a decentralized Ethereum restaking protocol that enables users to restake their ETH and liquid staking tokens to secure multiple Actively Validated Services (AVSs), creating a marketplace for pooled security.​

What is an Actively Validated Service (AVS)?
An AVS is a blockchain protocol or service that leverages EigenLayer’s shared pool of restaked ETH for cryptoeconomic security.

Is restaking safe?
Restaking introduces additional risks, including systemic risk due to shared validator capital across multiple protocols, increased slashing vulnerability, complexity, liquidity lock-ups, and potential cascading failure from correlated slashing events.

How can I earn yield from restaking?
Users earn additional yield by delegating their restaked ETH to validators running AVSs. Validators and their delegators earn rewards from both Ethereum’s base staking and the AVSs they secure, effectively stacking yields.