In less than a year, EigenLayer, a project offering restaking of Ether, has accumulated more than $15 billion in deposits, while its competitor Symbiotic reached $1.2 billion in under a month.
The concept of repeated staking has rapidly become a new investment trend in the crypto industry. In late February, Andreessen Horowitz (a16z) fund invested $100 million in EigenLayer, which was one of the largest venture deals of 2024 in the crypto industry. Prior to that, the startup raised $50 million from crypto venture capital fund Blockchain Capital.
On September 30, the EigenLayer protocol team lifted token transfer restrictions, allowing holders to trade and transfer their EIGEN tokens, including airdrop rewards. As of the October 3 article update, EIGEN was trading around $3.12, down 8% after being listed on major crypto exchanges, including Binance.
A project like EigenLayer and similar services have created a trend on the market, but the technology itself is not without risk. We tell you what restaking is, how it works, and what the prospects for its development are.
What is restaking?
Validators are essential for ensuring the functioning of Proof of Stake (PoS) blockchains. To become one, you must lock a portion of your coins on the blockchain. The validator then supports the network, confirming transactions and creating new blocks. In exchange for that, the validator On September 30, the EigenLayer protocol team lifted token transfer restrictions, allowing holders to trade and transfer their EIGEN tokens, including airdrop rewards. As of the October 3 article update, EIGEN was trading around $3.12, down 8% after being listed on major crypto exchanges, including Binance.gets rewarded based on the amount of coins he has locked.
To understand what restaking is, let’s address what came before it — staking.
The mechanics behind staking may vary from one blockchain to another, but they all share a common principle: if a validator tries to cheat the blockchain, confirm a fraudulent transaction, or operate in an incorrect configuration, his coins are revoked by the network, i.e. stacked coins are like a collateral against validator’s fraud.
However, if you stake coins within a specific protocol on Ethereum, those coins can only be used for validation and security reasons of that particular that protocol. This means that any project on Ethereum must attract its own pool of stakers and compete with other protocols for their coins.
The concept of restaking is based on the idea that you could use the same coins across multiple protocols simultaneously. For example, with simple staking, if one wants to stake his coins in 3 projects with 100 ETH each, he would typically need 300 ETH. With restaking, he only needs 100 ETH to support all three projects. And at the same time if he wanted to use 300 ETH to stake in 3 protocols, with restaking that would mean to hack each protocol with 51% attack for example one would need 300 ETH, and not just 100ETH as with simple staking.
For crypto users restaking is a way to maximize their profit, while for developers it is an opportunity to quickly and cheaply secure other elements of the core network, including protocols, bridges, oracle networks, and Layer 2 solutions. That is, developers don’t need to build their validator network. Instead, they can offer restaking to existing validators, in exchange for a small fee.
Changes in Ethereum that made restaking possible
In April 2023, Ethereum developers activated the Shapella update, which included several changes to the consensus and execution layers. The most important one was the ability to withdraw ETH from the Beacon Chain deposit contract. The update sparked a surge of interest in cryptocurrency staking with the inflow of liquidity since validators were able to unlock assets.
In the eyes of potential investors, the finalization of the Proof-of-Stake (PoS) mechanism has turned staking into an understandable and relatively risk-free passive income model and marked the culmination of Ethereum’s staking infrastructure, enabling stakers to efficiently add and withdraw their ETH holdings.

Thus, Shapella has created the necessary conditions for the emergence of new directions and the realization of projects, the launch of which was previously impossible due to the existing restrictions in the network. One such direction is restaking. The leader in restacking within the Ethereum ecosystem is EigenLayer, so let’s take a closer look at it..
What is EigenLayer restaking protocol?
EigenLayer was technically the first restaking protocol launched on the Ethereum core network, founded by Sreeram Kannan, a tenured associate professor at the University of Washington where he directed the UW Blockchain Lab.

EigenLayer provides the infrastructure that is beneficial for both developers and stakers.
Eigenlayer protocol aims to resolve several challenges faced by development teams, or “actively validated services” (AVS) in the blockchain space. According to the team’s White Paper, it can solve the following problems:
Bootstrapping a new AVS: smaller blockchain applications might struggle when it comes to establishing their proof-of-stake security systems to enhance their security.
Value leakage: when a new AVS creates its trust pool, users end up paying extra fees to these pools in addition to their Ethereum transaction fees. This causes some of the value to be diverted away from Ethereum.
Capital cost burden: validators who stake to secure a new AVS face significant costs. To cover these expenses, they must generate high enough revenues. For most AVSs, these capital costs far exceed operational expenses.
The lower trust model for DApps: any supporting component of a DApp could be vulnerable to attacks. EigenLayer CEO Sreeram Kannan gave an example: if $100 billion were staked across 100 protocols instead of $1 billion per protocol, attacking any one protocol would require $100 billion, not just $1 billion.
As shown in the picture below, in the traditional isolated model, an attacker could compromise a single AVS to succeed. In contrast, with EigenLayer’s pooled security (on the right), everything is anchored in Ethereum, requiring an attacker to compromise the entire pooled stake, which is valued at $13 billion at the time of writing.

To address these problems, EigenLayer developers offer two novel solutions: pooled security via restaking and free-market governance.
Pooled security via restaking: EigenLayer provides pooled security by allowing Oracle networks, data availability layers, bridges, etc. to be protected by restaking ETH rather than their tokens.
In particular, after restakers lock their assets whether they are LSTs or ETH with validators, validators can then agree to protect any AVS they choose.
Validators set their withdrawal credentials in the EigenLayer smart contract so they can be automatically removed if they misbehave.
In turn, AVS pays a commission for security and validation services, which are received by validators and restakers.
The result is the combination of Ethereum’s very strong crypto-economic security with other protocols built on top of it.
Free-market governance: EigenLayer provides an open market mechanism that allows validators to determine their risk-reward ratio and choose which modules to secure.
EigenLayer views this as a service provided by venture capital firms: their support is essential for innovation, but the returns are at risk (in this case, the risk of retrenchment). It creates a marketplace in which validators can choose whether to opt in or out of each module built on EigenLayer.
Risks of restaking
Investors, developers, and venture capitalists welcome the idea of restaking, but some members of the crypto community see it as a risk for the entire crypto market.
- Collusion risk. Validators might team up to attack the restaking system all at once, which could harm the protocol.
- Bubble risk. Restaking could lead to the creation of a speculative bubble, where the value of restaked assets might become artificially inflated.
- Contagion risk. If one AVS penalizes an operator, the impact could spread throughout the entire staking ecosystem, lowering the value and security of all other AVSs that rely on it.
- Rehypothecation crisis. As liquid restaking tokens become more common, new risks emerge. If protocols misuse users’ tokens by putting them into multiple staking services or restaking services, a problem in one service could potentially trigger a chain reaction affecting many projects and causing widespread issues.
Vitalik Buterin advised caution regarding restaking in his blog post “Don’t Overload the Ethereum Consensus, emphasizing the importance of maintaining chain minimalism and urging developers to consider alternative strategies for achieving their security objectives. He pointed out that, although restaking can serve low-risk purposes, it might endanger the mainnet’s security, particularly if Ethereum validators face slashing on external chains.
Buterin argued that while reusing ETH validated by validators—despite some inherent risks—is generally acceptable, using Ethereum’s public consensus for specific application goals is not. He warned that such approaches could pose risks, including the possibility of a 51% attack and the potential erosion of community control, without naming particular initiatives or projects.
What is the future of restaking?
Looking ahead, the restaking sector is poised for significant expansion, offering a broader range of products and services to both retail and institutional investors. This growth will likely feature adjustable lock-up durations, diversified risk profiles, and variable return potentials to better accommodate varying investor preferences and risk tolerances.
As capital continues to flow into the restaking space, effective governance within cryptocurrency frameworks will become increasingly critical. Active stakeholder participation will play a crucial role in shaping the strategic direction and policies of crypto projects, fostering more democratic and decentralized ecosystems.
Max Shak from Nerdigital.com highlights that restaking is set to become a major component of the crypto ecosystem. He notes, “As the DeFi (Decentralized Finance) landscape continues to evolve, restaking offers a way to enhance returns by leveraging existing staked assets. In the future, we might see restaking protocols becoming more sophisticated, with enhanced security measures and greater integration with various DeFi platforms. This could lead to increased liquidity and more dynamic staking opportunities for investors.” However, he also emphasizes that the future of restaking will depend on regulatory developments and the ability of these protocols to maintain transparency and community trust. If these challenges are effectively addressed, restaking could become a mainstream financial instrument within the broader blockchain ecosystem.
Kartik, CMO at QuillAudits, also sees a promising yet complex future for restaking. He predicts, “As more capital and innovation flow into the restaking sector, I anticipate a broader range of products and services tailored to various investor needs. We’ll likely see options with adjustable lock-up periods, diversified risk profiles, and variable returns, making restaking more appealing to both retail and institutional investors.” However, he warns that the rapid growth of restaking protocols will make governance increasingly important. He adds, “Active stakeholder participation will be necessary to shape the policies and strategic directions of these projects, fostering a more democratic and decentralized ecosystem. Yet, with more stakeholders involved, the risk of governance attacks or failures increases, which could have systemic impacts.
Conclusion
Given the push for decentralization, better security, and increased capital efficiency, restaking presents a compelling opportunity. It enables the creation of blockchain systems without the need for a dedicated validator network, avoiding high token inflation or the requirement for a proprietary token. This lets developers focus on specific innovations rather than building the entire blockchain infrastructure from scratch.
Yet, opinions vary. Some view restaking as a promising investment and a major leap in crypto security, while others, including key figures from the industry, see it as riskier due to potentially unstable fundamentals.
FAQ
What is restaking?
Restaking allows you to use the same coins across multiple protocols at once. This means you can support several projects with fewer coins compared to traditional staking, making it more efficient for both users and developers.
What is EigenLayer?
EigenLayer is the first restaking protocol on the Ethereum core network, founded by Sreeram Kannan. It provides infrastructure beneficial for both developers and stakers, solving challenges like bootstrapping security for new blockchain applications, preventing value leakage, reducing capital costs for validators, and enhancing trust for DApps.