Restaking

Staking in crypto typically refers to locking up tokens to help secure a blockchain and earn rewards in return. Restaking takes that concept one step further: it allows tokens that are already staked and securing one network to simultaneously be used to provide security for other protocols as well, earning additional yield without requiring the staker to commit new capital.

The concept was popularized by EigenLayer on Ethereum. When ETH is staked to secure Ethereum, it is locked and earning staking rewards. EigenLayer allows those same staked ETH tokens to be “restaked,” meaning the staker opts into also providing cryptoeconomic security to other services built on top of EigenLayer — such as data availability layers, bridges, or new blockchain networks. These additional services pay fees for the borrowed security, creating a new revenue stream for the staker. However, restaking also introduces additional risk: if a restaker behaves dishonestly toward any of the protocols they have opted into, their staked ETH can be “slashed.” Opting into many protocols simultaneously multiplies both the potential rewards and the potential for slashing.

Example: Think of restaking like a security guard who already has a contract to protect one bank. A neighboring jewelry store offers to pay them an extra fee to also keep an eye on their storefront during the same shift. The guard’s reputation and professional stake are on the line for both commitments — if they slack off on either job, they risk losing their license. The jewelry store benefits from accessing an established professional’s security without hiring from scratch.