Restaking 101
Last updated
Last updated
Initially, Bitcoin emerged as a decentralized ledger for secure value transfers. Ethereum took that core idea and added programmable smart contracts, paving the way for decentralized finance (DeFi) and more advanced blockchain use cases. As the ecosystem exploded, numerous new blockchains, sidechains, and rollups appeared—each with its own security or validator set. This fragmented approach often meant smaller networks were more vulnerable since they had fewer resources or less capital staked.
Restaking rethinks the concept of staking by allowing your already-staked tokens (or LSDs) to be staked again in another layer or service. It helps reducing security bootstrapping overhead for builders and provide opportunities for users to put their assets to work.
Instead of each independent network having to bootstrap security from scratch, they can leverage restaking to borrow security with the “reuse” of users' staked capital for additional protocols. These protocols—called Actively Validated Services (AVSs)—might be oracles, data availability services, rollups, or specialized co-processors. Restakers earn extra yields, but also take on additional slashing or performance risks.
Amplified Yields: Your original staked tokens can secure more than one protocol, letting you collect multiple reward streams.
AVS Diversity: AVSs can be anything from oracles to specialized data layers or bridging solutions.
User Choice: You, as a staker, pick how many AVSs to secure. Some might offer higher yields but come with more stringent uptime or slash conditions.
Restaking, as the name suggests, involves staking an asset once again after the initial staking. This process allows the staked asset to be used in another staking program or protocol, enhancing its utility and providing the holder with an additional set of rewards, although with increased slashing risks.
Let’s look at the above diagram. It is a simple diagram that illustartes how restaking processes. Stakers bring their assets and restake. Then they delegate their restaked assets to an operator. Operators choose which Actively Validated Services (AVSs) to opt in and AVSs borrow crypto economic security from the pool.
Stakers can potentially increase their earnings by staking assets on two protocols.
The more assets restaked, the higher a network’s value, enhancing its resilience against attacks. This increased security makes it a reliable hub for dapps, protocols, and platforms.
Restaking makes the original token more versatile, which discourages dumping. The increased utility helps avoid value loss for the project and its investors, fostering a more stable and sustainable ecosystem.
Services or applications that require trust and utilize the network's security by leveraging restaking. AVSs play a crucial role in accelerating open innovation by enabling developers to launch a diverse range of blockchain systems. These include fast finality layers, data availability layers, virtual machines, keeper networks, oracle networks, bridges, AI inference/training mechanisms, and committees for trusted execution environments.
Asset holders who deposit their assets to provide economic security to the network and typically receive rewards in return. Restakers pledge their assets to the ecosystem, and in return receive rewards for their commitment.
Operators are essential for maintaining and managing decentralized trust networks through node operations, ensuring nodes are operational and adhering to consensus protocols to uphold network security and integrity. They also play a critical role in supporting AVSs by providing the necessary infrastructure and security assurances for their operations.
Cascading Slashing: If you restake the same LSD in multiple AVSs and a slash event happens in one, it could affect your stake in all.
AVS-Specific Conditions: Some might have strict uptime requirements or custom slashing logic—always read their documentation.
Restaking tackles fragmented security by letting stakers or LSD holders reuse their capital in multiple protocols. It enhances capital efficiency, improves yields, and helps unify blockchains with smaller or specialized security demands. Though stakers face added risk, restaking has already proven to be a potent mechanism for accelerating multi-chain growth.
