Earn MORE With Your Staked ETH!! Restaking EXPLAINED (Feat. EigenLayer)

ETH “restaking” and LRTs (Liquid Restaked Tokens) are one of the newest narratives to emerge. Learn what it is and how it works.

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Read 📖
What is restaking 👉 https://www.coingecko.com/learn/what-is-restaking-crypto

Links 🔗
Eigenlayer: https://app.eigenlayer.xyz/
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Timestamps:
00:00 Intro
00:29 What is restaking?
01:31 Restaking on EigenLayer
03:04 EigenLayer’s pooled security
04:23 EigenLayer’s test net phase
06:01 Other protocol
06:46 Outro

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#restaking #lrt #liquidrestaking #eigenlayer #pufferfinance #tenet #astridfinance #staking #ethereum #layer2 #bitcoin #bitcoinetf #etf #trading #decentralized #cryptocurrency #crypto #blockchain #coingecko

Ever wondered what it would be like to split  yourself up into multiple you’s? Working 5,   10, 20 jobs all at once and  earning just as many paychecks. The bad news – we’re nooooot  quite there yet for humans.

The good news – you can already do this with ETH  thanks to a little DeFi magic called…restaking.  We’re already familiar with  how liquid staked tokens or   LSTs work. You can think of staking as  the next evolutionary step from this. The idea of restaking is simple.

We’ve already got all these staked  ETH securing the Ethereum blockchain,   so why not repurpose what we already have  across multiple venues to secure multiple   protocols and earn multiple  yields – all at the same time. With restaking, ETH staking can be “outsourced”  to secure other new protocols or ecosystems,  

And users will be able to tap into these platforms  to earn additional fees and rewards, on top of   what they are already getting from staking ETH. Restaking has the potential to reshape the   DeFi landscape as a new, emerging primitive,  overhauling how crypto-economic security should be  

Approached, and offering greater accessibility,  trust assurances, and income opportunities. At the forefront of this is none other than   the pioneers themselves – EigenLayer. EigenLayer was founded by Sreeram Kannan,   who was previously a tenured associate professor  at University of Washington where he directed the   UW Blockchain Lab, focusing on designing  new blockchain infrastructure protocols.

In fact, all of EigenLayer’s first  team members came from the same lab.  EigenLayer essentially provides  the infrastructure and blueprint   that enables restaking. Without  getting to deep into the weeds,   users who have staked their ETH natively or  in liquid staking protocols can participate  

In EigenLayer smart contracts to “restake”  and secure other platforms, creating a sort   of pooled security which leverages Ethereum, the  largest PoS network by value of staked tokens. Usually, creators of new protocols need  to bootstrap a new “trust network” to   get security, including spinning  up a whole new blockchain network,  

With its validators, native token,  building network effects and so forth. With restaking, new protocols or “actively  validated services” (AVS) can tap into the   pooled security of Ethereum stakers instead,  making this process a lot more capital efficient.   AVS are also called “EigenLayer Modules” and  can be anything from a sidechain, a bridge,  

Oracle network, keeper network,  data availability layer and more. In the traditional silo model, attackers could  succeed by simply compromising one of the AVS. With EigenLayer’s pooled security, everything will  be anchored in Ethereum, and attackers will need   to attack the entire pooled stake instead, which  is worth $13 Billion dollars at time of shooting.

Bear in mind however that opting into  EigenLayer smart contracts also means   you may be subjecting your staked ETH  to additional slashing conditions.  For stakers, this pooled security means  they’ll be able to earn more by securing   all these other AVS by simply restaking  ETH instead of using separate tokens.

In order to facilitate this service,  EigenLayer has introduced an open marketplace,   a place where aspiring AVS will be able  to woo the favor of ETH validators. In this system, validators will have  the power to pick and choose which   EigenLayer module to support. This  would of course mean that modules  

Must offer appealing incentives  to these would be validators. With the combination of pooled security and an  open marketplace for it, EigenLayer effectively   functions as an intermediary layer between  Ethereum and other blockchain applications.  As of December 2023, EigenLayer  is in its Second Testnet Phase.

Although the EigenLayer team has given no  indications of a token release at the time   of writing, several users have rushed  to interact with this guarded launch,   with hopes of qualifying for an airdrop. During this testnet period, liquid restaking  with RocketPool rETH, Lido stETH and Coinbase  

CbETH will be limited in the testnet period,  while native ETH restaking will be uncapped. With a TVL of $255M, EigenLayer  is already a Top 50 DeFi protocol  Logically, the concept of restaking  should appeal to users due to the   seamless integration of multiple yield  streams for LSTs. While this may be true,  

It is also worth noting that VItalik Buterin  has openly expressed concerns over restaking. Exposing Ethereum validators to more “work”  and “duties” complicates their primary role of   securing the Ethereum network, and may introduce  risks that could potentially jeopardize the   security of the mainnet, especially when these  validators face slashing in third-party protocols.

Kannan, the founder of EigenLayer, also echoed  the same sentiment and agreed with Vitalik,   but reiterated that restaking  can still be used for low-risk   scenarios, such as “highly attributable  misbehaviours such as double signing”,   or “for getting the decentralization  benefits of Ethereum without slashing”.  Meanwhile, many other protocols have  also started venturing into restaking.

There’s Puffer Finance, a liquid restaking  pool that allows users to restake their   ETH or LSTs. These “Puffers” stake ETH for  pufETH, a liquid “restaking” token or LRT   that will let its holders earn both staking AND  restaking rewards. In a sense, Puffer Finance  

Is acting as a “broker” to restake all the ETH  deposits into EigenLayer on behalf of its users. Other projects include Tenet, a layer-one  blockchain which utilizes LSTs as collateral   to secure its own network, and Astrid Finance,  another restaking pool similar to Puffer Finance. 

Restaking and EigenLayer seem primed  to emerge as the next DeFi primitive,   offering numerous benefits to developers  and market participants alike. Just like   LST and LSTfi, it won’t be long before other  protocols start tapping into the LRT market. Thanks to restaking, ETH staking is  now a more attractive yield avenue,  

Which could encourage more users  and liquidity to hop onboard. Ethereum’s staked ratio is still one of the  lowest across other PoS chains like Solana,   Cosmos, and Polygon, but the combined might  of LST, LSTfi and restaking could very well  

Be the force needed to nudge this number up. And that’s it for restaking! Want to learn   more about ETH staking and LSTfi?  Check out our previous video here.