Re-staking Industry Research Report: A Brand New Growth Point for the DeFi Ecosystem
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Re-staking Industry Research Report: A Brand New Growth Point for the DeFi Ecosystem
The rapid development of the restaking industry has brought new growth opportunities to the Ethereum ecosystem and the broader blockchain market.
Navigating Web3 tides with focused insights1. Background on Staking and Liquid Staking
Ethereum staking involves locking up ETH to secure the network and earn additional ETH rewards in return. This mechanism was designed to enhance the security of the Ethereum network but comes with certain risks and limitations. First, staked ETH cannot be freely traded during its lock-up period, resulting in limited liquidity. Stakers are unable to withdraw or sell their ETH quickly, which may lead to asset illiquidity. Second, staking carries the risk of penalties due to improper validation. Moreover, becoming a validator on the Ethereum network requires a high barrier to entry—individuals must stake at least 32 ETH, a significant requirement for average investors.
To lower the entry threshold into staking and mitigate liquidity constraints, platforms such as ConsenSys and Ledger began offering pooled staking services. These platforms allow users to combine their ETH to meet the minimum staking requirement, enabling ordinary investors to participate. However, even through pooled staking, the staked ETH remains locked and cannot be withdrawn immediately, meaning liquidity issues persist.
To address this issue, liquid staking emerged. Liquid staking introduces liquid tokens that represent staked ETH, allowing users to continue participating in DeFi and other market activities. Lido pioneered liquid staking, followed by platforms like Rocket and Stader launching similar offerings. These services not only reduce participation barriers but also provide greater flexibility. With liquid tokens, investors can earn staking rewards while deploying the tokens in other investment strategies to achieve higher potential returns.
Differences Between Staking and Liquid Staking
Traditional staking requires users to lock their ETH until the withdrawal period ends. In contrast, liquid staking allows users to receive a liquid token representing their staked ETH, which they can freely trade on the market. This innovation enhances capital liquidity and offers diversified yield opportunities. Through liquid staking, investors benefit from staking rewards and can further increase returns by using these tokens across DeFi platforms.
2. The Rise of Restaking
Restaking, first introduced by EigenLayer, is a novel concept that enables users to leverage already-staked ETH to secure external modules not directly tied to Ethereum’s main chain—such as sidechains, oracle networks, and data availability layers. These modules typically require Active Verification Services (AVS), secured by their own native tokens, leading to high costs in establishing independent security networks and weaker trust models. Restaking addresses this by leveraging Ethereum’s large validator set to enhance the security of these modules, thereby reducing the cost of building standalone security infrastructures.
The key advantage of restaking lies in its ability to effectively extend Ethereum’s validator security to other chains or applications, making attacks on these modules significantly more costly than potential gains. This mechanism allows restaking networks to protect critical components within broader blockchain ecosystems by sharing Ethereum’s robust security foundation.
While EigenLayer was the first protocol to introduce restaking, other protocols have since emerged as the space matures. Different restaking protocols vary in implementation and supported asset types, creating a competitive and diverse market landscape.
EigenLayer’s whitepaper details the concept of “pooled security” in restaking. This mechanism implies that when multiple validators participate in securing the same network via restaking, attackers face exponentially higher costs to compromise it. While this design strengthens module security, it also introduces the risk of validator collusion. If multiple modules share the same pool of staked assets, coordinated malicious behavior among validators could simultaneously threaten several networks. To mitigate this, EigenLayer proposes limiting the amount of assets each validator can redelegate.
3. Overview of Restaking Protocols
1. Supported Deposit Assets
A key differentiator among restaking protocols is the range of supported deposit assets. Currently, EigenLayer supports only ETH and liquid staking tokens (LSTs), whereas Karak and Symbiotic support a broader variety. Karak accepts various assets including liquid restaking tokens (LRTs), Pendle LP tokens, and stablecoins, while Symbiotic supports additional assets such as ENA and sUSDe.
This asset diversity is crucial for the attractiveness and growth of restaking protocols. Supporting more asset types helps attract greater liquidity and user participation, especially within multi-chain ecosystems. EigenLayer plans to expand its asset support in the future by introducing dual staking and LP restaking options.
2. Security Models
EigenLayer adopts a more conservative approach to security, primarily accepting ETH and its derivatives as restaking assets to ensure network safety and economic stability. In contrast, Karak and Symbiotic offer wider restaking asset options, providing higher flexibility and customizable security levels.
Designing a restaking protocol's security model requires balancing flexibility and safety. By focusing on ETH and related assets, EigenLayer minimizes volatility risks associated with low-market-cap tokens. Karak and Symbiotic, however, offer adjustable security configurations, enabling services to select their desired level of economic security based on specific needs.
Both EigenLayer and Karak employ upgradable core smart contracts managed via multi-signature systems across infrastructure components, ensuring decentralized governance. Symbiotic, on the other hand, uses immutable contract designs to reduce governance risks—but this means any bugs or flaws in the code would require redeployment of the entire protocol.
3. Supported Chains and Partnerships
The scope of chain support is another core competitive factor for restaking protocols. Currently, EigenLayer and Symbiotic focus primarily on the Ethereum ecosystem, while Karak extends deposit support to five blockchains. Although most TVL remains concentrated on Ethereum, Karak’s multi-chain capabilities enable it to attract assets from non-Ethereum chains into restaking.
Karak has also launched K2, a Layer 2 network serving as a test environment for DSS, allowing upgrades and testing before deployment on Ethereum. In comparison, EigenLayer and Symbiotic do not currently offer dedicated test environments, though integration with other chains and protocols allows indirect testing.
Ultimately, a protocol’s success depends on its ability to build strong partnerships. As the pioneer in restaking, EigenLayer has attracted the largest number of AVS participants, with notable partners including EigenDA, AltLayer, and Hyperlane. Karak and Symbiotic are also expanding their partner networks, integrating projects like Wormhole and Ethena.
4. Overview of Liquid Restaking
1. Types of Liquid Restaking Tokens
In liquid restaking protocols, users receive liquid restaking tokens (LRTs) upon depositing staked assets. LRTs improve capital efficiency by enabling stakers to engage in DeFi activities without unlocking their underlying staked assets. For example, Renzo supports wBETH deposits and issues ezETH as an LRT, while Kelp accepts ETHx and sfrxETH deposits and issues rsETH. These tokens represent various staked assets and unlock further capital efficiency within the DeFi ecosystem.
Some protocols aggregate multiple liquid staking tokens (LSTs) into a single LRT, enhancing flexibility. While multi-asset LRTs offer higher capital utilization, they also increase management complexity and counterparty risk. Native-focused protocols like Puffer, although supporting stETH, eventually convert it into native ETH for restaking to avoid dependency on and exposure to LST protocol risks.
Different types of LRTs provide users with diverse staking asset choices, but also complicate inter-protocol integrations. Managing and utilizing these tokens requires careful balance between security and flexibility.
2. DeFi and Layer 2 Support
A key advantage of liquid restaking protocols is enhanced capital efficiency—staked assets generate returns through restaking while also being usable across DeFi for additional yields. Platforms like Pendle enable yield trading mechanisms, allowing users to leverage staked positions and extract extra returns via liquid restaking. Stakers can provide liquidity on platforms like Pendle, earning returns before maturity while avoiding impermanent loss.
Additionally, liquid restaking protocols integrate deeply with decentralized exchanges (DEXs) such as Curve and Uniswap, providing liquidity for LRTs and enabling faster exits when needed. Some protocols also offer vaults with advanced yield strategies—including recursive restaking and options—to further boost returns.
With the rapid development of Layer 2 solutions, liquid restaking protocols are increasingly supporting L2 networks, offering users lower gas fees and faster transactions. While most liquidity and volume remain on Ethereum’s mainnet, the maturation of L2s is expected to drive more staking and restaking activity there, maximizing capital efficiency.
3. Support for Restaking Protocols
Liquid restaking protocols were initially built on EigenLayer, the pioneer and earliest provider of restaking services. As Karak and Symbiotic launched, liquid restaking expanded to more platforms and integrations. Karak allows users to directly deposit LRTs into its platform for restaking, while Symbiotic restricts LRT usage, requiring users to stake through alternative channels.
EigenLayer’s recent airdrop sparked controversy, with some dissatisfied users withdrawing funds to pursue yields and airdrop opportunities elsewhere. Symbiotic, with its flexible restaking mechanism, has become a popular alternative. Though capped at $200 million in deposits, its growing partnerships position it well to attract more users in the future.
Overall, competition among liquid restaking protocols will intensify over time. Protocols offering higher capital efficiency and flexibility are likely to capture larger market shares.
5. Growth and Future Outlook of Restaking
Since late 2023, restaking deposits have grown rapidly. Latest data shows the ratio of liquid restaking TVL to total restaking TVL has exceeded 70%, increasing by approximately 5–10% monthly over recent months. This indicates that most restaking liquidity flows through liquid restaking protocols, making them a major growth engine within the category.
However, despite the overall upward trend, withdrawal events involving EigenLayer and Pendle in June 2024 highlighted market volatility. Following EigenLayer’s airdrop, over 40% of deposits were withdrawn. This suggests airdrop incentives may attract short-term speculators, but long-term capital retention remains a challenge. Therefore, protocols need sustainable incentive structures and stable yield models to attract and retain users.
Looking ahead, emerging protocols like Karak and Symbiotic are poised to intensify market competition. Karak has captured market share through multi-asset restaking support, while Symbiotic offers new restaking options via partnerships and its Decentralized Verifier Network (DVN).
6. Summary
As of July 2024, nearly 33 million ETH are staked on Ethereum, with approximately 13.4 million ETH (about $46 billion) staked through liquid staking platforms—accounting for 40.5% of total staked ETH. This highlights liquid staking’s role as a cornerstone of Ethereum’s staking ecosystem. However, this percentage has slightly declined recently due to EigenLayer expanding support for native ETH deposits and imposing deposit caps on LSTs.
Going forward, as restaking platforms open more deposit options, lift deposit limits, and expand into new asset classes, the restaking market will continue to grow. Liquid restaking protocols are expected to capture an increasing share of the market. While airdrop-driven incentives may cause temporary outflows, long-term growth will be driven by deeper integrations with major DeFi protocols and platforms, further improving capital efficiency.
Across the restaking industry, protocols like EigenLayer, Karak, and Symbiotic are pioneering new security models and liquidity solutions. The rise of restaking not only enhances network security but also brings greater liquidity and capital efficiency to digital assets within the DeFi ecosystem. As these protocols evolve, we see a wave of innovation expanding Ethereum’s functionality and offering users richer investment opportunities.
Restaking, as an innovative mechanism, effectively leverages Ethereum’s network security to support other blockchain modules and protocols. It strengthens security while introducing new economic incentives. The successful implementation and broad adoption of protocols like EigenLayer, Karak, and Symbiotic suggest restaking will become an indispensable part of the blockchain ecosystem.
Nonetheless, challenges remain. Issues around protocol security, regulatory compliance, and the impact of market volatility on liquidity and capital efficiency require ongoing attention. As technology advances and markets mature, restaking protocols are expected to refine their models and develop more effective mechanisms to overcome these hurdles.
1. Policy and Regulatory Impact
As the restaking and liquid restaking markets expand, regulators may increase scrutiny and impose new rules. Balancing innovation with market stability will be a key challenge for policymakers and regulators. Ensuring transparency, fairness, and investor protection will be essential for sustainable industry growth.
2. User Education and Risk Management
User education and risk management are equally critical in the restaking space. Users must understand how different protocols work, along with their associated risks and rewards, to make informed investment decisions. Effectively managing liquidity risk, market risk, and operational risk will directly impact both individual returns and the long-term stability of protocols.
7. Conclusion
The rapid development of the restaking sector is bringing new growth momentum to the Ethereum ecosystem and the broader blockchain market. With more restaking and liquid restaking solutions emerging, users gain greater capital efficiency and flexibility, further advancing the evolution of decentralized finance (DeFi). Despite existing challenges, continuous innovation and protocol optimization will drive sustained progress in this field.
In summary, restaking and liquid restaking represent key growth vectors within the Ethereum ecosystem, offering stakers new yield opportunities and accelerating blockchain innovation. As markets mature and technologies advance, the restaking industry is poised to achieve broader adoption and create substantial value.
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