Restaking & EigenLayer

01 · Concept — what problem does it solve?

A new protocol (a bridge, an oracle, a data-availability layer) needs its own expensive trust network. Restaking, pioneered by EigenLayer, lets ETH that is already staked be re-pledged to secure these extra services — called AVSs (Actively Validated Services). Stakers earn additional rewards for taking on additional slashing conditions; new services rent Ethereum's economic security instead of bootstrapping their own. It is rehypothecation applied to trust — and it carries the same efficiency-versus-contagion trade-off. As of 2026 EigenLayer holds ~$18B and the vast majority of the restaking market.

02 · Mechanics

• Opt-in to AVSs: a restaker (or LST holder) deposits into EigenLayer and chooses which AVSs to help secure. Each AVS adds its own slashing rules.
• Liquid restaking tokens (LRTs): protocols like ether.fi/Renzo wrap the whole flow — stake → restake → manage AVS selection — into one liquid token, so the position stays usable in DeFi.
• Yield stacking: base staking (~3–4%) + LST rewards + AVS rewards (~1–3% more) — paid in ETH or the AVS's token.
• Shared security: instead of each new protocol minting a token and praying for a deep validator set, it buys security from a pool of restaked ETH.
• Slashing went live: AVS slashing is now active — misbehavior against an AVS's rules confiscates part of the restaked ETH.

03 · Formulas

// stacked yield
total ≈ base_staking + LST_rewards + Σ AVS_rewardsᵢ

// stacked slashing exposure
max_loss = Σ slashable_fractionᵢ   over every AVS opted into

// the LRT chain
ETH → stETH (Lido) → restaked (EigenLayer) → LRT (ether.fi) → DeFi collateral

04 · Edge cases & risks

• Correlated slashing — opting one stake into many AVSs means one bad event, or several at once, can compound losses far beyond a single validator fault.
• Leverage tower — ETH → LST → LRT → lending collateral → borrow → repeat. Each wrapper adds smart-contract and depeg risk; an unwind cascades down the whole stack.
• AVS quality is uneven — rewards tempt restakers into securing services whose slashing conditions they don't fully understand; the yield is paid before the risk is proven.
• Systemic reflexivity — restaking concentrates risk back onto Ethereum's own validator set; a large correlated slashing could feed back into consensus security itself.
• Slashing "insurance" is thin — most "slashing cover" is a small reserve treasury (a slice of rewards) and untested claims, not catastrophe-grade insurance. In a large correlated event the loss flows straight through to LST and LRT holders before any backstop kicks in — treat slashing as a real, largely uninsured loss vector.
• Operator concentration — most restaked ETH pools into a handful of large operators, so the "decentralized" security you rent out is really a few balance sheets. Their shared AVS choices — or any cartelization — shape your risk profile more than you do.