Ethereum staking is the process of participating in the validation of transactions and securing the Ethereum network by locking up ETH as collateral. This became possible when Ethereum transitioned from a Proof-of-Work (PoW) model to Proof-of-Stake (PoS) on September 15, 2022.
While Ethereum staking offers rewards, it has notable drawbacks. Staked ETH is typically locked, rendering it unusable for other purposes until withdrawal is permitted. Additionally, earning potential is limited to staking rewards, restricting the flexibility of stakers to utilize their assets in other investment opportunities.
EigenLayer is a protocol built on Ethereum that enables restaking, a new cryptoeconomic primitive designed to enhance blockchain security and utility. It allows Ethereum validators and stakers to "reuse" their staked ETH or liquid staking tokens (LSTs) like stETH, rETH, and hETH to secure additional protocols. This process offers participants the opportunity to earn extra rewards while extending Ethereum's foundational security to other decentralized applications and services.
The core principle of EigenLayer is restaking, achieved through two methods: native restaking, where validators redirect their withdrawal credentials to EigenLayer, and LST restaking, which involves depositing liquid staking tokens into EigenLayer’s smart contracts. Participants who opt into EigenLayer agree to additional slashing conditions beyond Ethereum’s consensus layer, ensuring robust security for other Actively Validated Services (AVS).
Ethereum restaking through EigenLayer enables stakers to leverage their staked ETH or liquid staking tokens (LSTs) to secure additional protocols. This process is conducted via native restaking or LST restaking.
Native restaking involves granting EigenLayer access to the withdrawal credentials of staked ETH. This requires deploying an EigenPod, a specialized smart contract managing the user's restaking operations. Validators must set the EigenPod as their withdrawal credentials and provide proof of the EigenLayer contract, which can be batched for efficiency.
The EigenPod is a personalized smart contract acting as a hub for restaking, managing rewards, withdrawals, and interactions. Each Ethereum wallet deploys one EigenPod, which collects consensus rewards and balances from exited validators. The deployer retains control over operations such as restaking and withdrawals.
Some Liquid staking tokens like stETH, rETH, or cbETH can also be restaked. Users deposit these tokens into EigenLayer’s smart contracts. Representing a 1:1 equivalent of staked ETH, these tokens allow users to access the value of their staked assets while the original ETH remains locked, enhancing liquidity and utility.
Once assets are restaked, users can delegate their position to an operator or run their own validator to support Actively Validated Services (AVS). AVS are applications leveraging the pooled security of restaked assets to enhance their protocols.
AVSs utilize EigenLayer’s pooled security to strengthen decentralized infrastructure. These include bridges, data availability layers, and other protocols requiring robust security. Participants earn additional yield for validating these services, accepting slashing risks for validator misbehavior.
EigenLayer introduces Restaked Points, calculated based on the restaked amount and duration, treating native and LST restaking equally. To ensure security, EigenLayer enforces extra slashing conditions beyond Ethereum’s consensus layer.
Ethereum restaking introduces mechanisms that significantly enhance the Ethereum ecosystem by leveraging pooled security, additional slashing conditions, and dual-earning opportunities.
EigenLayer extends Ethereum’s base security layer by allowing stakers to reuse their staked ETH to secure additional services. This creates a pooled security model that aggregates ETH security across multiple protocols and services. By reducing capital requirements for new protocols, EigenLayer lowers entry barriers and enhances security guarantees for adopting services. This shared security strengthens trust and reliability in the Ethereum ecosystem, driving innovation and scalability.
Restaking introduces new slashing conditions beyond Ethereum’s standard consensus layer. Validators who opt into EigenLayer agree to these additional slashing risks, which are specific to the Actively Validated Services (AVS) they support. Slashing may occur for misbehavior in AVS operations rather than just consensus violations. These conditions incentivize proper behavior across diverse services, create extensible security for emerging projects, and promote greater accountability for validators engaged in multiple protocols.
Restaking provides users with opportunities to earn rewards from multiple sources. Validators continue to receive standard Ethereum staking rewards (approximately 3% APY) while also earning additional rewards for participating in AVSs and other EigenLayer-integrated protocols. This dual-earning structure increases overall yields for stakers, encourages involvement in innovative services, and fosters a more dynamic and lucrative staking ecosystem.
Ethereum restaking enhances the utility of staked ETH, allowing users to secure additional protocols beyond Ethereum’s network. This maximizes the value of staked assets while maintaining blockchain integrity.
Restaking also strengthens security by pooling Ethereum’s robust security across multiple decentralized applications, fostering trust and innovation.
Moreover, stakers benefit from increased earning potential, gaining rewards from both traditional Ethereum staking and Actively Validated Services (AVS), creating a more rewarding and versatile staking experience.
