Restaking
Restaking is the practice of pledging already-staked assets (e.g., staked ETH or Liquid Staking Tokens) as security for additional protocols or services, in exchange for extra rewards. The same capital secures multiple things at once.
✦ Key Insight
Restaking — pioneered by EigenLayer on Ethereum and Babylon on Bitcoin — created a new yield primitive and a new category of "shared security" services. For traders, it produced billions in new on-chain economic activity and reshaped how validators and operators are compensated.
✕ Common Misconceptions
Treating restaking yield as additive without modeling additional slashing risk.
Stacking LSTs and LRTs into deep leverage without considering correlated risk.
Concentrating in a single operator that may be slashed across multiple AVSs at once.
Detailed Explanation
How It Works: A staker delegates their stake to an operator who runs both the base chain's validator software and one or more Actively Validated Services (AVSs) — bridges, oracles, data availability layers. Misbehavior on any AVS can result in slashing of the underlying stake; honest behavior earns additional rewards from each AVS.
FAQs:
Is restaking riskier than staking? Yes — additional services bring additional slashing conditions.
Can I restake on Bitcoin? Yes — Babylon and similar protocols allow native BTC to back other chains' security.
In Practice
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