Restaking Guide: EigenLayer, Liquid Restaking & Maximizing Yield

Restaking represents one of the most innovative developments in Ethereum's post-merge ecosystem, offering stakers a way to maximize their capital efficiency while simultaneously securing new decentralized services. If you're already familiar with traditional ETH staking, restaking is the next evolution—allowing you to put your staked ETH to work a second time without unbonding.

In this comprehensive guide, we'll explore how EigenLayer pioneered the restaking concept, dive deep into liquid restaking tokens (LRTs), examine the risks and rewards, and provide a step-by-step framework for implementing a restaking strategy that aligns with your risk tolerance and yield objectives.

What is Restaking?

Restaking is a mechanism that allows Ethereum validators and stakers to reuse their staked ETH (or liquid staking tokens) to provide cryptoeconomic security for additional protocols and services beyond the Ethereum mainnet. Think of it as "double-dipping" your staking rewards—your capital continues securing Ethereum while simultaneously backing other decentralized applications and infrastructure.

The Traditional Staking Limitation

With conventional Ethereum staking, your 32 ETH (or fraction thereof through liquid staking) is locked into the Beacon Chain to validate transactions and secure the network. In return, you earn staking rewards of approximately 3-5% APR. However, this capital is essentially idle beyond its single purpose: securing Ethereum.

The Restaking Innovation

Restaking breaks this limitation by enabling your staked assets to serve multiple functions concurrently:

1. Primary Function: Continue validating Ethereum blocks and earning base staking rewards
2. Secondary Function: Secure Actively Validated Services (AVS) and earn additional rewards
3. Capital Efficiency: Maximize returns without requiring additional capital deployment

This creates a new primitive in DeFi: pooled security. Instead of every new protocol needing to bootstrap its own validator set and security model from scratch, they can leverage Ethereum's existing economic security through restaking.

EigenLayer Explained: The Restaking Protocol

EigenLayer is the pioneering protocol that introduced restaking to Ethereum. Launched in 2023 by Sreeram Kannan and the team at Eigen Labs, it functions as a middleware layer between Ethereum's consensus and various decentralized services requiring cryptoeconomic security.

Core Architecture

EigenLayer operates through a series of smart contracts that enable three primary participants:

1. Restakers (Capital Providers)

• Deposit staked ETH, liquid staking tokens (LSTs), or native ETH into EigenLayer contracts
• Opt-in to secure specific Actively Validated Services
• Accept additional slashing risks in exchange for supplemental yields

2. Operators (Node Runners)

• Register with EigenLayer to perform validation duties for AVS
• Stake collateral and accept delegated restaked assets
• Run infrastructure to validate AVS tasks and earn service fees

3. AVS Developers (Service Builders)

• Launch decentralized services that require validator networks
• Define slashing conditions and reward mechanisms
• Leverage Ethereum's security without building from scratch

How EigenLayer Works

The protocol creates a two-sided marketplace:

Supply Side: Restakers provide economic security by staking assets and accepting slashing conditions defined by AVS protocols. Your restaked ETH acts as collateral that can be slashed if you (or your delegated operator) behaves maliciously or fails to perform required duties.

Demand Side: AVS protocols pay fees for this security service. Instead of bootstrapping a new token and validator economy, they can launch quickly by tapping into billions of dollars of existing Ethereum security.

This creates what EigenLayer calls "programmable trust"—allowing developers to customize their security requirements while giving stakers diversified yield opportunities.

EigenLayer vs. Traditional Staking

How Restaking Works: Technical Deep Dive

Understanding the mechanics of restaking is crucial for managing risk and maximizing returns. Let's break down the process flow:

Step 1: Asset Deposit

Restakers can deposit several asset types into EigenLayer:

Native Restaking: Ethereum validators who run their own nodes can point their withdrawal credentials directly to EigenLayer contracts, allowing their 32 ETH validator to secure both Ethereum and selected AVS simultaneously.

LST Restaking: Users holding liquid staking tokens (stETH, rETH, cbETH, etc.) can deposit these into EigenLayer without needing to run a validator. This is the most accessible entry point for retail participants.

Beacon Chain ETH: Through EigenPods, validators can restake their Beacon Chain ETH while maintaining custody of their withdrawal keys—a crucial security feature.

Step 2: Operator Selection

After depositing, restakers must either:

Operate Yourself: Run the necessary infrastructure to validate for chosen AVS protocols. This requires technical expertise and ongoing maintenance but eliminates third-party risk.

Delegate to Operators: Choose a professional operator to perform validation duties on your behalf. Operators charge fees (typically 5-15%) but handle all technical requirements. Key selection criteria include:

• Track record and uptime history
• Fee structure and transparency
• AVS specialization and diversification
• Slashing history (ideally zero)

Step 3: AVS Selection

This is where restaking becomes truly programmable. Each AVS has unique characteristics:

Risk Parameters: Different slashing conditions, correlation risks, and smart contract exposure Yield Profile: Fee structures vary widely based on AVS demand and complexity Time Commitment: Some AVS require longer lock-up periods than others Operator Compatibility: Not all operators support all AVS

Strategic restakers build portfolios of AVS exposure, balancing risk and reward across multiple services.

Step 4: Reward Accrual

Yields come from multiple sources:

1. Base Ethereum Staking: Continue earning standard ETH staking rewards (~3-5% APR)
2. AVS Fees: Earn rewards from each AVS you secure (varies widely, 2-20%+ APR)
3. Operator Incentives: Some operators offer additional rewards to attract delegators
4. Token Incentives: Many AVS launch with governance tokens distributed to early restakers

Step 5: Ongoing Management

Restaking isn't "set and forget":

• Monitor Operator Performance: Poor performance can lead to reduced rewards or slashing
• AVS Health Checks: Watch for smart contract exploits or economic attacks
• Rebalancing: Optimize AVS allocation as yields and risks change
• Claim Rewards: Most protocols require manual claiming of accrued fees

Actively Validated Services (AVS): The Demand Side

AVS represent the innovative services that consume restaked security. Understanding the AVS landscape is essential for informed restaking decisions.

Categories of AVS

Data Availability Layers Services like EigenDA provide high-throughput data availability for Layer 2 rollups. Validators ensure data is available and retrievable, enabling rollups to post transaction data more cheaply than on Ethereum mainnet.

Oracle Networks Decentralized price feeds and data oracles can leverage restaked security instead of bootstrapping their own token economics. Slashing conditions trigger when oracles provide provably incorrect data.

Bridges and Interoperability Cross-chain bridges are notoriously vulnerable to attacks. AVS-based bridges use restaked ETH as economic security, making attacks prohibitively expensive while providing faster finality than traditional proof systems.

Sequencing Services Shared sequencers for rollups, MEV mitigation services, and transaction ordering protocols can operate as AVS, earning fees while preventing centralization risks.

Zero-Knowledge Proof Generation Computationally intensive ZK proof generation can be distributed across AVS validators, with slashing conditions for invalid proofs.

AI and Compute Verification Emerging AVS verify off-chain computation for AI model training, complex simulations, or decentralized rendering—bringing trustless computation to new domains.

Evaluating AVS Risk

Not all AVS are created equal. Critical evaluation factors include:

Smart Contract Maturity: Has the AVS code been audited? By whom? Is it battle-tested?

Economic Security Model: Are slashing conditions well-defined and enforceable? Is the economic incentive structure sound?

Correlation Risk: If multiple AVS share similar vulnerabilities, a single exploit could trigger cascading slashing across your portfolio.

Team and Backing: Who built the AVS? Do they have a track record? Are there reputable investors or advisors?

Usage and Demand: Is the AVS solving a real problem? Are users paying for the service, or is it purely speculative?

Liquid Restaking Tokens: Maximizing Flexibility

While EigenLayer pioneered restaking, liquid restaking protocols took it further by introducing composable tokens that represent restaked positions. This created what many call "restaking 2.0."

The Liquid Restaking Innovation

Liquid Restaking Tokens (LRTs) solve a critical problem: capital lockup. When you restake directly on EigenLayer, your assets are locked for the duration of your AVS commitments, which can be weeks or months. LRTs make restaked positions liquid and composable.

How LRTs Work

1. Deposit: You deposit ETH or LSTs into a liquid restaking protocol
2. Restaking: The protocol deposits assets into EigenLayer and allocates across multiple AVS
3. Receipt Token: You receive an LRT (like eETH, rsETH, or ezETH) representing your restaked position
4. Composability: Use your LRT across DeFi while still earning restaking yields
5. Exit: Redeem LRT for underlying assets (subject to unbonding periods)

Major Liquid Restaking Protocols

Ether.fi (eETH)

Ether.fi was among the first liquid restaking protocols, launching eETH as a receipt token for restaked ETH. Key features:

• Non-Custodial Architecture: Validators maintain control of withdrawal keys through Ether.fi's node services
• Operator Diversification: Automatically allocates across multiple professional operators
• AVS Strategy: Conservative approach focusing on audited, lower-risk AVS
• DeFi Integration: eETH is accepted as collateral on Aave, Compound, and major lending protocols
• Governance Token: ETHFI token provides governance rights and fee sharing
• Yield: Typically 4-7% APR combining base staking + AVS rewards

Ether.fi's approach emphasizes security and decentralization, making it popular among risk-averse restakers who want professional management.

Kelp DAO (rsETH)

Kelp focuses on multi-asset restaking, accepting various LSTs beyond just ETH:

• LST Agnostic: Accepts stETH, ETHx, sfrxETH, and other liquid staking tokens
• Capital Efficiency: Automatically compounds yields across multiple layers
• Partnerships: Strong integrations with DeFi protocols for rsETH utility
• Miles Program: Loyalty rewards for early adopters and long-term holders
• Risk Distribution: Spreads exposure across different LST providers
• Yield: Generally 5-8% APR depending on AVS selection

Kelp appeals to users already holding diverse LST positions who want to add a restaking layer without converting to ETH.

Renzo Protocol (ezETH)

Renzo positions itself as a "Strategy Manager" for restaking:

• Active Management: Professional team actively rebalances AVS exposure based on risk/reward
• Operator Network: Curated set of high-performance operators
• Transparency: Detailed reporting on AVS allocation and performance
• EigenLayer Points: Maximizes accumulation of EigenLayer loyalty points
• REZ Token: Governance and protocol fee distribution
• Yield: Aggressive approach targeting 6-10% APR

Renzo suits users who prefer active management and are comfortable with higher risk for potentially higher returns.

LRT Risk Considerations

Liquid restaking adds another layer of complexity and risk:

Smart Contract Risk: Additional contracts between you and your underlying ETH create more exploit vectors.

Depeg Risk: LRTs can trade below their NAV during market stress or if concerns arise about the protocol's solvency.

Liquidity Risk: While LRTs are "liquid," secondary market liquidity may dry up during crises, making exits difficult.

Yield Optimization Risk: Protocols making aggressive AVS allocations for higher yields may expose you to excessive slashing risk.

Governance Risk: LRT protocols make decisions about AVS allocation on your behalf—mismanagement can impact your returns.

Risks of Restaking: What Can Go Wrong

Restaking offers enhanced yields, but it's crucial to understand the expanded risk surface. Here's a comprehensive risk taxonomy:

Slashing Risks

Ethereum Base Slashing: Your underlying ETH validator can still be slashed for Ethereum-level violations (double-signing, surround voting). Standard penalties apply: minimum 1 ETH up to your entire stake in correlation scenarios.

AVS Slashing: Each AVS defines its own slashing conditions. Potential triggers include:

• Providing incorrect data or computation
• Being offline during critical validation periods
• Signing conflicting messages
• Failing to meet performance requirements

Crucially, slashing conditions across multiple AVS can compound. If your operator fails catastrophically, multiple slashing events could theoretically reduce your principal significantly.

Operator Misbehavior: When delegating, you inherit your operator's risk profile. A malicious or incompetent operator can trigger slashing across all their delegators.

Smart Contract Risks

EigenLayer Contracts: While audited by top firms like Sigma Prime and Consensys Diligence, EigenLayer is still relatively new infrastructure handling billions in TVL. Undiscovered vulnerabilities could lead to fund loss.

AVS Contracts: Each AVS introduces its own smart contract risk. Newer AVS may lack comprehensive audits or battle-testing.

LRT Protocols: Additional contract layers for liquid restaking tokens create more potential exploit vectors.

Upgrade Risks: Many contracts are upgradeable, introducing governance attack vectors or malicious upgrade risks.

Economic and Market Risks

Yield Compression: As more capital flows into restaking, AVS fees may decline, reducing overall yields. This is classic supply-demand dynamics.

Token Price Risk: Many yields include AVS governance tokens. Token price volatility can dramatically impact realized returns.

Correlation Risk: During crypto market downturns, slashing events may correlate with price declines, compounding losses.

Liquidation Risk: Using LRTs as collateral for lending introduces liquidation risk if LRT prices decline or depeg.

Operational Risks

Withdrawal Delays: Exiting restaking positions requires unbonding from all AVS, which can take days or weeks depending on protocol parameters.

Complexity: Managing multiple AVS positions, operator relationships, and reward claiming requires ongoing attention and technical knowledge.

Information Asymmetry: Understanding AVS codebases and risk parameters requires significant technical expertise most users lack.

Mitigation Strategies

Diversification: Don't put all capital into a single operator or AVS. Spread exposure across multiple protocols with low correlation.

Conservative Allocation: Start with well-audited, established AVS before exploring newer, higher-yield opportunities.

Operator Due Diligence: Choose operators with long track records, transparent operations, and strong security practices.

Position Sizing: Limit restaking to a portion of your ETH holdings. Never restake capital you can't afford to lose.

Monitoring: Set up alerts for slashing events, operator performance issues, and AVS health metrics.

Yield Opportunities: Maximizing Returns

Understanding where yields come from and how to optimize them is key to successful restaking.

Yield Components Breakdown

Layer 1: Base Ethereum Staking (3-5% APR)

• Consensus layer rewards for proposing and attesting blocks
• Execution layer rewards (MEV and priority fees)
• This base layer continues regardless of restaking activities

Layer 2: AVS Fees (2-15% APR)

• Fees paid by AVS protocols for security services
• Varies dramatically based on AVS demand and competition
• More specialized or compute-intensive AVS typically pay higher fees

Layer 3: Token Incentives (0-20%+ APR)

• Many AVS launch with governance token distributions to early supporters
• EigenLayer's own points program (potentially leading to token airdrop)
• LRT protocol tokens (ETHFI, REZ, etc.)
• Highly variable and speculative component

Layer 4: DeFi Composability (Variable)

• Lending your LRT on Aave or Morpho for additional yield
• Providing liquidity for LRT pairs on DEXs
• Using LRT as collateral to mint stablecoins and deploy elsewhere
• Risk increases significantly with leverage

Current Yield Landscape (Q4 2025)

Conservative Strategy (4-7% Total APR)

• Direct EigenLayer restaking with established operators
• Focus on audited AVS like EigenDA and reputable oracle networks
• Minimal leverage or DeFi composability
• Best for: Risk-averse stakers prioritizing capital preservation

Balanced Strategy (6-10% Total APR)

• Liquid restaking through Ether.fi or Kelp
• Diversified AVS exposure including some newer protocols
• Limited DeFi usage (e.g., using LRT as collateral with conservative LTV)
• Best for: Typical restakers seeking enhanced yield with manageable risk

Aggressive Strategy (10-20%+ Total APR)

• Multiple LRT positions across protocols
• Early adoption of new AVS with higher fees
• Heavy DeFi composability (lending, liquidity provision, leverage)
• Chasing token airdrops and points programs
• Best for: Sophisticated users who can actively manage risk and have capital to absorb potential losses

Yield Optimization Tactics

AVS Rotation: Actively monitor AVS fee rates and rotate capital toward higher-paying opportunities as they emerge.

Points Farming: Engage with protocols during points campaigns to maximize potential airdrops (but don't rely on speculative value).

Compounding: Regularly claim and reinvest rewards to benefit from compound growth.

Tax Efficiency: Consider tax implications of frequent claiming vs. letting rewards accumulate (jurisdiction-dependent).

Leverage Management: If using LRTs as collateral, maintain conservative loan-to-value ratios (40-50%) to avoid liquidations.

Step-by-Step Restaking Guide

Ready to start restaking? Here's a practical implementation framework:

Step 1: Assess Your Starting Position

If You're Not Yet Staking ETH: Consider starting with traditional staking first (see our crypto staking guide) to understand the basics before adding restaking complexity.

If You Hold Native ETH: You can enter through native restaking on EigenLayer (requires 32 ETH and validator infrastructure) or convert to LSTs first.

If You Hold LSTs: You're in the ideal position to begin liquid restaking immediately.

Step 2: Choose Your Approach

Direct EigenLayer: Maximum control and potentially lower fees, but requires technical knowledge and active management.

Liquid Restaking Protocol: Easier entry, professional management, and composability, but adds smart contract risk and protocol fees.

Decision Factors:

• Technical expertise: Low → Choose LRT protocol
• Capital amount: <32 ETH → LST or LRT route
• Time commitment: Busy → Choose managed LRT
• Risk tolerance: Conservative → Start with direct EigenLayer and established AVS

Step 3: Select Your Protocol/Operator

For Direct EigenLayer:

1. Research operators on EigenLayer's official operator list
2. Review their AVS specializations and fee structures
3. Check their historical performance and slashing record
4. Join their Discord/Telegram to gauge professionalism
5. Start with a small delegation to test the relationship

For Liquid Restaking:

1. Compare Ether.fi, Kelp, and Renzo strategies and philosophies
2. Review their AVS allocation approach (conservative vs. aggressive)
3. Check DeFi integrations relevant to your strategy
4. Assess smart contract audits and bug bounty programs
5. Consider token economics if relevant to your thesis

Step 4: Execute Your Entry

Direct EigenLayer Process:

1. Navigate to app.eigenlayer.xyz
2. Connect wallet with LSTs or ETH
3. Choose "Restake" and select your asset
4. Review and approve the deposit transaction
5. Navigate to the Operator tab
6. Select your chosen operator and delegate
7. Choose which AVS to opt into (or let operator decide)

LRT Protocol Process (using Ether.fi as example):

1. Visit app.ether.fi
2. Connect your wallet
3. Navigate to "Liquid" section
4. Enter amount of ETH or LST to deposit
5. Review projected yield and terms
6. Approve and execute deposit
7. Receive eETH tokens in your wallet
8. (Optional) Deploy eETH in DeFi protocols

Step 5: Monitor and Manage

Weekly Tasks:

• Check for unclaimed rewards across protocols
• Monitor operator uptime and performance metrics
• Review AVS health and any reported issues

Monthly Tasks:

• Assess yield performance vs. expectations
• Rebalance AVS allocation if significantly misaligned
• Review new AVS opportunities that match your risk profile

Quarterly Tasks:

• Comprehensive portfolio review
• Tax planning and record-keeping
• Strategy reassessment based on market conditions

Step 6: Harvest and Compound

Most restaking protocols require manual claiming of rewards:

1. Track reward accrual through protocol dashboards
2. Factor in gas costs—only claim when economical
3. Decide whether to compound back into restaking or diversify
4. Keep detailed records for tax purposes
5. Consider using reward automation tools as they emerge

Frequently Asked Questions

Is restaking worth it for small holders?

If you have less than 5 ETH, high gas costs for transactions and claiming may eat significantly into your additional yields. Liquid restaking tokens with lower entry barriers and automated compounding make more sense for smaller positions. Focus on protocols with efficient reward distribution to minimize transaction overhead.

Can I get slashed on multiple AVS at once?

Yes, this is called "correlation slashing" and represents one of the more serious risks. If your operator or the underlying infrastructure fails in a way that violates multiple AVS conditions simultaneously, you could face compounded slashing penalties. This underscores the importance of operator selection and diversification.

How do I choose between different LRT protocols?

Consider three primary factors: (1) Risk appetite—Ether.fi is more conservative, Renzo more aggressive; (2) DeFi integrations—which protocols support the LRT you're considering across lending, DEXs, and other venues; (3) Fee structures—compare deposit/withdrawal fees and ongoing management fees. There's no single "best" choice; align with your strategy.

What happens if an AVS fails or shuts down?

If an AVS ceases operations, you'll need to opt-out of that service through your protocol or operator. Typically this involves an unbonding period before you can reallocate to other AVS or withdraw. Well-designed AVS should have shutdown procedures that minimize disruption, but some operational complexity is inevitable.

Are restaking rewards taxed differently than staking rewards?

Tax treatment varies by jurisdiction, but generally restaking rewards are treated similarly to staking rewards—as income at the time of receipt. However, the complexity of multiple reward streams (base staking, AVS fees, token incentives) can complicate tracking. Consult with a crypto-knowledgeable tax professional, and maintain detailed records of all reward claims.

Can I restake staked ETH from Coinbase or other centralized exchanges?

Not directly. Centralized exchange staking doesn't give you custody of LSTs or withdrawal credentials. You would need to: (1) Unstake from the exchange; (2) Withdraw ETH to a self-custody wallet; (3) Either deposit directly to a liquid restaking protocol or convert to LSTs first. This process can take days and incurs transaction costs.

What's the minimum amount needed to start restaking?

For liquid restaking protocols, minimums are typically very low—often just the cost of a single transaction (0.01-0.1 ETH). Direct native restaking through EigenLayer requires 32 ETH if running your own validator. LST restaking on EigenLayer has no strict minimum but should be economically viable considering gas costs—generally 1+ ETH makes sense.

How long does it take to withdraw from restaking?

Withdrawal times vary by protocol but generally involve: (1) Requesting withdrawal from the LRT or EigenLayer; (2) Unbonding period from all active AVS (typically 7-14 days); (3) Processing time for the protocol (1-7 days); (4) If converting back to native ETH from LSTs, additional time for that unbonding. Total timeline: 1-4 weeks typically. Plan accordingly and don't restake capital you may need quickly.

Is restaking available on other chains besides Ethereum?

The restaking concept is primarily developed on Ethereum, where it emerged to leverage ETH's massive economic security. However, similar concepts are being explored on other proof-of-stake chains. Cosmos has "interchain security," Polkadot has "shared security," and some EVM chains are developing their own restaking frameworks. Ethereum remains the dominant ecosystem for restaking as of late 2025.

What makes a good AVS to restake for?

Evaluate AVS on several dimensions: (1) Audit quality—has the code been reviewed by reputable security firms? (2) Economic model—are slashing conditions clear and reasonable? Is there genuine demand for the service? (3) Team credibility—who built it and what's their track record? (4) Compensation—are fees sufficient for the added risk? (5) Lock-up terms—can you exit relatively quickly if issues arise? Start with established, well-audited AVS before exploring newer opportunities.

Conclusion: Strategic Restaking for 2025 and Beyond

Restaking represents a paradigm shift in how we think about staked capital efficiency. By enabling Ethereum's economic security to simultaneously protect multiple decentralized services, EigenLayer and the liquid restaking ecosystem have created entirely new yield opportunities for ETH holders.

However, with these opportunities come meaningful additional risks. Successful restaking requires understanding the technical infrastructure, carefully selecting operators and AVS, and actively managing your positions. This isn't a passive "set and forget" strategy—it demands ongoing attention and education.

For experienced stakers comfortable with DeFi complexity and smart contract risk, restaking offers a compelling way to enhance yields while contributing to the security of emerging decentralized services. Start small, prioritize established protocols and AVS, and gradually expand your allocation as you gain experience and confidence.

The restaking ecosystem continues to evolve rapidly. New AVS categories, improved liquid restaking mechanisms, and better risk management tools emerge regularly. Staying informed, engaging with protocol communities, and maintaining a balanced risk-aware approach will be key to long-term success in this exciting new frontier of Ethereum staking.

Sources

1. EigenLayer Documentation - Official technical documentation and whitepapers: https://docs.eigenlayer.xyz
2. Ether.fi Protocol Documentation - Liquid restaking architecture and mechanics: https://etherfi.gitbook.io
3. Kelp DAO Documentation - Multi-LST restaking strategies: https://kelpdao.xyz/docs
4. Renzo Protocol Documentation - AVS strategy and risk management: https://docs.renzo.xyz
5. "The Restaking Collective" Research Papers - Academic analysis of restaking economics and security models
6. Dune Analytics - EigenLayer and LRT protocol dashboards for TVL and yield tracking
7. Rated Network - Operator performance metrics and slashing data
8. Blocknative - MEV and validator economics research
9. L2Beat - AVS ecosystem tracking and security analysis
10. Ethereum Foundation Research - Proof-of-stake and restaking security considerations