⚖️Restaking

Overview

Restaking, as the name suggests, involves staking an asset once again after the initial staking period. This process allows the staked asset to be used in another staking platform, enhancing its utility and providing the holder with an additional set of rewards, although with increased slashing risks.

Let’s look at an example from the Ethereum ecosystem.

The Ethereum network is known for its high-security PoS consensus, thanks to numerous validators and widespread distribution. However, staked ETH lays dormant on Ethereum, which sparked the development of liquid staking derivatives. Liquid staking transforms staked ETH into liquid tokens, which can be used in decentralised finance .

Since liquid staking eliminates the 32 ETH minimum staking requirement, it allows small-stake holders to pool their assets with other users and potentially enables them to benefit from staking rewards.

Restaking takes this concept one step further. These protocols allow other protocols to use assets staked on Ethereum for their own security.

Both validator and delegator stakers can earn multiple rewards: once from the main Ethereum network, and additionally from the protocol they are restaked to.