How Restaking Works: EigenLayer, Babylon and the AVS Economy

What Is Restaking?

Restaking takes capital that is already doing one job, securing a blockchain through staking, and puts it to work on a second job at the same time. An Ethereum validator, or a Bitcoin holder, locks the same coins into an additional protocol, which then leans on that economic weight to back services that have nothing to do with block production on their home chain: oracle networks, cross-chain bridges, data availability layers, rollup sequencers, and increasingly cloud-style compute and AI verification jobs. In exchange for extra yield, the depositor accepts extra slashing conditions. If the service being secured misbehaves, or the node fails to do its job properly, part of the restaked capital can be destroyed.

The idea took hold because Ethereum’s own staking yield, a native issuance rate in the high twos percent plus a little more from MEV, looked thin next to the roughly one third of ETH’s total supply already locked up earning it. Restaking offered a way to squeeze more return out of capital that was already committed, without asking anyone to unstake and redeploy elsewhere.

The term itself was coined by the team behind EigenLayer, led by Sreeram Kannan, who popularized the idea of pooled security for Ethereum starting in 2023. It has since become an entire sector with its own vocabulary. Native restaking means an Ethereum validator itself opts a portion of its stake into securing extra protocols. Liquid restaking means depositing ETH, or a liquid staking token like stETH, into a protocol such as ether.fi or Kelp DAO, which handles operator and protocol selection and issues a tradeable receipt token in return. Neither version is limited to Ethereum anymore: Bitcoin holders can now restake through Babylon, and SSV Network has built its own restaking layer on top of distributed validator technology.

Restaking only became possible at scale because Ethereum itself had already gone through its own transition. The Merge, in September 2022, moved Ethereum from proof of work to proof of stake, turning ETH into an asset that could be locked up to produce blocks and earn a yield in the first place. Restaking is best understood as a second wave built on top of that shift: once staking existed as a large, liquid pool of committed capital, someone was always going to try to put the same collateral to work twice.

How Restaking Works: Native vs Liquid Restaking

Mechanically, native restaking works through a middleware contract that sits between a validator and the outside protocols it wants to secure. The validator, or its operator, registers with the restaking platform and opts specific ETH into specific Actively Validated Services, commonly abbreviated AVS. Each AVS defines its own rules for what counts as good behavior and what triggers a penalty, and the restaking platform enforces those rules against the validator’s bonded stake. Because this happens through smart contracts rather than through Ethereum’s own consensus layer, a validator can restake into several AVS at once, each with different terms, and can withdraw, subject to unbonding periods, if it no longer wants the exposure.

Liquid restaking removes the need to run a validator at all. A user deposits ETH or an existing liquid staking token into a protocol like ether.fi, Renzo, Puffer or Kelp DAO. That protocol pools deposits, delegates them across a curated set of node operators and AVS, and mints a liquid restaking token, an LRT, back to the depositor. The LRT is meant to track the value of the underlying restaked position plus rewards, and it can be traded, held, or reused as collateral elsewhere in DeFi the same way stETH or wstETH is used today. That reusability, sometimes called rehypothecation, is the main selling point of LRTs and, as 2026 has shown more than once, the main source of contagion when something goes wrong upstream.

Whichever route a depositor takes, native or liquid, an unbonding period applies before restaked capital can be withdrawn once slashing conditions are attached, typically stretching from days to weeks depending on the AVS and the platform. LRT protocols also compete on how they select node operators: some run a small, whitelisted set vetted for track record and infrastructure quality, while others run a more permissionless marketplace where operators bid for delegated capital. That curation choice is itself a risk trade-off; a small trusted operator set is easier to hold accountable but reintroduces the kind of centralization restaking was partly meant to reduce.

From EigenLayer to EigenCloud

EigenLayer remains the protocol that made restaking a mainstream idea, and it has changed shape substantially since its early mainnet phases. Slashing, the actual enforcement mechanism that makes restaking more than a marketing term, went live on mainnet on April 17, 2025, on an opt-in basis. As of mid-2026 the network counts roughly 190 AVS in various stages of development, about 40 of them live on mainnet, more than 2,000 registered operators and over 80,000 depositing addresses, according to EigenCloud’s own published figures.

The name change from EigenLayer to EigenCloud, completed in 2025, reflects a strategic pivot: rather than pitching itself purely as a restaking marketplace, the project now markets a broader verifiable cloud stack, bundling EigenDA (data availability), EigenCompute and EigenAI (verifiable off-chain and AI computation) alongside the original restaking product. That mirrors a wider trend of crypto infrastructure projects chasing AI verifiability, a theme explored in HOGE Wire’s look at Ritual’s bet on trustworthy on-chain AI. Eigen Labs raised $70 million from a16z around mid-2025 specifically to fund the EigenCloud pivot.

The pivot has coincided with a tokenomics overhaul. In December 2025, EigenLayer governance proposed ELIP-012, creating an Incentives Committee jointly staffed by Eigen Labs and the Eigen Foundation to redirect EIGEN token emissions. Under the plan, a new EmissionsController contract mints EIGEN weekly and steers it toward what the proposal calls productive stake, capital actively securing live AVS and generating real fees, rather than passive deposits. A 20 percent fee on rewards paid to incentive-subsidized stake, plus cloud-service fees after operator costs, now flow into a buyback mechanism intended to push value back to EIGEN holders, according to EigenCloud’s own announcement. It is a tacit admission that emissions alone were not making the token reflect the protocol’s growth.

EIGEN itself trades far below its late-2024 highs. As of mid-July 2026 it changes hands around $0.25, with a market capitalization near $183 million on about 741 million circulating tokens, according to CoinGecko. That is down roughly 96 percent from its all-time high of $5.65, set on December 16, 2024. Total value locked tells a messier story depending on which tracker is consulted, ranging anywhere from roughly $4.7 billion to the high teens of billions across 2026 so far. Part of that spread is simply ETH’s own price collapse, from roughly $5,000 in August 2025 to under $1,800 by mid-July 2026, since restaked ETH volumes are usually reported in dollar terms rather than coin terms. But deposits have also genuinely contracted as the points-farming era that drove 2024’s restaking boom has faded and real, fee-generating usage has had to take its place.

Kannan has always framed restaking’s risk profile differently to critics. In a 2023 CoinDesk interview, he argued that “anything that restaking can do, already liquid staking can do,” and said plainly that “I view restaking as a lesser risk than liquid staking,” on the logic that restaking makes slashing conditions explicit and opt-in rather than hiding operator risk inside a liquid token. Whether that argument has aged well is exactly what the rest of this piece tries to unpack.

AVS Explained: What Restaked Capital Actually Secures

An Actively Validated Service is any protocol that borrows economic security from restaked capital instead of, or in addition to, running its own token and validator set from scratch. In practice, four categories cover most of what exists today:

• Oracle and data feed networks, which need honest, timely price reporting and can slash operators who report bad data
• Cross-chain bridges and messaging layers, which need honest relaying of deposits and withdrawals between chains
• Data availability layers, such as EigenDA, which need operators to actually store and serve the data they attest to holding
• Rollup sequencing, fast finality and pre-confirmation services, which need operators to order transactions honestly and avoid short-lived reorgs

The pitch is straightforward: a new protocol that needs cryptoeconomic security no longer has to bootstrap its own token, inflation schedule and validator set from zero. It can rent security from ETH or BTC that is already staked and already trusted. EigenDA itself, EigenLayer’s own data availability AVS, was the first to launch on mainnet in April 2024 and still tops most operator uptime leaderboards; Lagrange followed as the first zero-knowledge AVS, using restaked ETH to secure state committees for optimistic rollups, and Omni Network uses the same restaked security to connect Ethereum rollups to one another. The catch is that the restaked capital is now exposed to a second, independent set of failure modes that have nothing to do with Ethereum’s or Bitcoin’s own consensus rules, and a bug or design flaw in any one AVS’s slashing logic can cost depositors money even if the base chain behaves perfectly. This is directly related to the trust assumptions explored in HOGE Wire’s explainer on how DeFi’s price feeds get attacked: restaking is, in part, an attempt to make oracle and bridge security cheaper to buy, not necessarily to make it foolproof.

SSV Network has taken a related but distinct approach with its based applications, or bApps, framework, built on top of its existing distributed validator technology. Rather than asking validators to expose their full 32 ETH principal, SSV’s model lets validators opt in through separate participation keys, so the core stake backing consensus is never slashable; only additional, voluntarily delegated capital is at risk. Founder and chief executive Alon Muroch has called bApps the “biggest, most ambitious project” the network has undertaken, one he has said “will profoundly change the restaking market.” Each bApp can set its own risk tolerance under what SSV calls a Risk Expressive Model, rather than inheriting one-size-fits-all slashing rules.

Liquid Restaking Tokens and the Rehypothecation Problem

Liquid restaking tokens exist to solve a UX problem: running a validator, or even manually delegating to multiple AVS, is not something most ETH holders want to do themselves. LRT protocols abstract that away, pooling deposits and issuing a single token that is supposed to track the value of a diversified restaking position. Four names currently dominate the space. Ether.fi’s eETH is the largest by a wide margin, with more than $3.2 billion deposited. Renzo’s ezETH holds roughly $2 billion. Puffer Finance’s pufETH, which markets itself around lowering the capital and hardware bar for solo validators while still offering liquid restaking, holds around $1.3 billion. Kelp DAO’s rsETH, after a sharp interruption discussed below, sits at roughly $1.5 billion.

The convenience of an LRT is also its main risk. Because the token is designed to be reused, as collateral on Aave, as a trading pair, as a building block in yield strategies, a failure at the restaking layer does not stay contained there. It propagates into every protocol that has accepted the LRT as collateral. Renzo’s ezETH briefly lost its peg in April 2024 during a reward-distribution change, a preview of the kind of stress that would hit the sector harder two years later. The core tension is that LRTs are marketed as close substitutes for ETH itself, but they carry a stack of additional dependencies, the restaking protocol’s smart contracts, its node operators, the specific AVS it has opted into, and often a cross-chain bridge, that plain ETH or even a simple liquid staking token does not.

The Restaking Landscape in 2026

EigenLayer and EigenCloud are not the only place to restake, even if the platform remains the largest by a wide margin. Symbiotic launched its mainnet in January 2025 with a different design philosophy: rather than restricting deposits to ETH and its derivatives, it accepts any ERC-20 token as collateral, and it shipped with slashing enabled from day one instead of adding it later. Symbiotic also lets each vault choose its own resolver, the party or mechanism that adjudicates disputed slashing events, whether that is a decentralized oracle like UMA, a court system like Kleros, or a plain multisig committee. Backed by a $29 million Series A from Pantera Capital in April 2025, Symbiotic has grown to roughly $897 million in deposits, about 5.5 percent of the restaking sector, without yet launching a public token.

Karak takes a similar multi-asset, multi-chain approach but remains smaller, at around $102 million, roughly 0.6 percent of sector deposits, pitching itself around restaking a broader mix of collateral, including stablecoins and liquidity provider tokens, rather than focusing narrowly on ETH derivatives the way EigenLayer originally did. Across DefiLlama’s restaking category, total deposits sat around $14.6 billion in mid-July 2026, with the liquid-restaking-token subset alone accounting for close to $7 billion of that. Every one of these figures should be read with a grain of salt: TVL trackers disagree with each other by billions of dollars depending on whether they count wrapped or re-wrapped LRTs once or twice, and whether they mark positions in ETH terms or dollar terms.

EigenLayer’s continued lead despite two years of competition is mostly a story of timing and network effects. It was first to market with a working slashing implementation and the largest set of AVS already building on top of it, which makes it the default choice for a new service that wants access to the biggest pool of restaked capital and operators. Symbiotic and Karak have had to compete on flexibility, broader collateral support and permissionless vault design, rather than on raw scale, and it shows in where they have found traction: DeFi-native applications that want an asset mix EigenLayer does not support, rather than a head-on bid for the same ETH restaking deposits.

SSV Network occupies an adjacent lane rather than competing head-on for the same deposits. It describes itself as the largest Ethereum distributed validator technology provider, citing more than 7 million ETH staked through its infrastructure, over $16 billion in associated ETH value, more than 120,000 validators and over 1,800 operators on its own dashboard. Its bApps layer, unveiled in January 2025, effectively turns that existing DVT network into restaking rails without asking validators to expose their core stake, and its SSV token trades around $2 with a market capitalization near $30 million, down about 97 percent from its March 2024 high.

Restaking Beyond Ethereum: Babylon and Bitcoin

Restaking’s logic does not require a smart-contract platform underneath it, and Babylon has spent the last year proving that with Bitcoin itself. Rather than wrapping BTC into a synthetic token or routing it across a bridge, Babylon uses Bitcoin’s own scripting capabilities to lock coins with a timelock, verifiable directly on the Bitcoin base chain, and lets that locked BTC back the security of proof of stake networks that opt into what Babylon calls Bitcoin Supercharged Networks. According to Babylon’s own dashboard, the protocol had roughly 56,853 BTC staked, worth about $5.6 billion, as of mid-2026, making it the largest Bitcoin staking system by that measure.

Babylon’s Genesis mainnet and its BABY token both launched on April 10, 2025, with an airdrop of 600 million BABY, six percent of total supply, split between Phase 1 stakers, base and bonus staking rewards, and early contributors, according to The Block’s coverage of the launch. BABY itself has traded far below the enthusiasm around the underlying TVL figures: after falling to roughly $0.0107 in March 2026, it recovered to above $0.02 by May, putting its market capitalization around $78 million against more than $5 billion in staked Bitcoin, a valuation gap that would need to close considerably for BABY holders to feel the TVL growth in the token price. A planned integration with Aave’s next major version would let natively staked BTC serve as lending collateral for the first time, though the timeline depends on Aave V4’s own launch schedule and a security review of the connector.

Babylon’s pitch inverts the usual restaking risk conversation. Where EigenLayer and its peers ask Ethereum stakers to accept new slashing conditions in exchange for yield, Babylon asks Bitcoin holders, whose coins otherwise earn nothing at all while simply held, to accept a comparatively novel set of smart contract and timelock risks in exchange for a yield that plain BTC custody has never offered. Whether that trade looks attractive is a matter of risk appetite rather than a settled question, especially since Bitcoin’s own base-layer security has never depended on anything like a slashing condition in the first place.

Case Study: The Kelp DAO/Aave Exploit and Its Recovery

If restaking’s rehypothecation risk needed a concrete illustration, it got one on Saturday, April 19, 2026. An attacker exploited Kelp DAO’s cross-chain bridge, at the time a 1-of-1 trust setup built on LayerZero’s Omnichain Fungible Token standard, to mint 116,500 rsETH out of thin air, inflating the token’s supply by roughly 18 percent without actually draining existing deposits. The attacker then deposited the freshly minted rsETH as collateral on Aave V3 and borrowed against it, leaving Aave holding about $196 million in bad debt once the fake collateral was recognized as worthless. Aave’s total value locked fell from roughly $26.4 billion to about $20 billion over the following weekend, and the AAVE token dropped 16 percent to around $92.

The recovery effort that followed became almost as notable as the exploit itself. Aave founder Stani Kulechov moved quickly to freeze rsETH’s borrowing power across Aave’s markets, writing that “rsETH has been frozen on Aave V3 and V4, the asset does not have any borrowing power as a measure due to KelpDAO bridge exploit that happened outside of Aave,” and adding that “Aave is my life’s work and we’re working nonstop to find the best possible outcome for users.” Kulechov personally pledged 5,000 ETH toward covering the shortfall, joined by Lido, ether.fi and Consensys in what participants called a DeFi United coalition, contributing more than $300 million in total to make affected users whole.

By the time the dust settled, roughly 117,132 rsETH had been burned on Arbitrum to correct the inflated supply, backing was restored through an Aave Recovery Guardian multisig, and Kelp migrated its bridge from LayerZero’s OFT standard to Chainlink’s Cross-Chain Interoperability Protocol, which now requires four independent attestors and 64 block confirmations before funds move, according to reporting on the recovery. Kelp says rsETH is now fully backed at all times across every chain it trades on, and its market capitalization has since climbed back to around $1.5 billion. LayerZero, for its part, publicly disputed responsibility, arguing the exploit stemmed from Kelp’s own bridge configuration choices rather than a flaw in the base messaging protocol, a disagreement that never fully resolved even after the money was made whole.

The Systemic Risk Debate: Vitalik Buterin’s Warning

Restaking has had a prominent skeptic since before EigenLayer’s mainnet even launched. In a May 2023 essay titled “Don’t overload Ethereum’s consensus,” Ethereum co-founder Vitalik Buterin warned against turning validators into general-purpose attestors for arbitrary off-chain claims. “Any expansion of the ‘duties’ of Ethereum’s consensus increases the costs, complexities and risks of running a validator,” he wrote, adding that “blockchain communities’ social consensus is a fragile thing, and each such extension makes the core itself more fragile.” His underlying worry was less about any single AVS failing and more about what happens if a large enough restaking application does fail: would the community feel pressured to treat it as too big to fail and bail it out through an emergency hard fork, importing the application’s risk into Ethereum’s own social contract.

Kannan has pushed back on that framing directly, arguing restaking makes risk more explicit and opt-in than the alternative, and separately rejecting the idea that any restaking application should be treated as too big to fail, arguing Ethereum could simply fork around a failed protocol’s damage rather than bail it out. Whether that is realistic once billions of dollars and thousands of node operators are entangled with a given AVS is exactly the kind of question that stayed theoretical until the Kelp DAO incident gave it a real-world stress test, and the fact that a coalition of protocols ended up voluntarily funding a rescue rather than letting losses fall where they landed suggests the too-big-to-fail dynamic Buterin worried about is not purely hypothetical.

A related concern is concentration. Ethereum Foundation researcher Danny Ryan has argued, in a widely cited note on the risks of liquid staking derivatives, that a single dominant staking-adjacent protocol crossing certain thresholds of Ethereum’s total stake becomes dangerous in stages: around one third of stake, it can stall finality; around one half, it can censor transactions; around two thirds, it could theoretically finalize an invalid chain. That argument was originally aimed at Lido’s dominance of liquid staking, but it applies just as well to a restaking platform that ends up commanding an outsized share of AVS security. With EigenCloud still holding the large majority of restaked value against a long tail of much smaller competitors, the sector has arguably reproduced the exact concentration dynamic it emerged partly to avoid.

Slashing: The Mechanism That Makes Restaking Real

None of restaking’s yield promise means anything without a credible slashing mechanism behind it, and the major platforms have taken noticeably different paths to build one. EigenLayer’s approach has been the most cautious: slashing existed as a design concept for years before it actually went live on mainnet on April 17, 2025, and even now it remains opt-in, with individual AVS defining their own conditions subject to governance review rather than one universal rulebook. Symbiotic went the opposite direction, shipping with slashing active from its very first day on mainnet in January 2025, and building in flexibility over how disputes get resolved.

Disputing a slashing event generally follows a similar shape across platforms even where the fine print differs: an AVS operator or watcher submits evidence of misbehavior, a challenge window opens during which the accused operator can contest the claim, and only after that window closes without a successful rebuttal does the penalty actually execute. Symbiotic’s choice to let vaults pick their own resolver for that dispute step, whether a decentralized oracle like UMA, an on-chain court like Kleros, or a plain multisig committee, rather than hard-coding one arbitration process for the whole network, is meant to let a bridge-security AVS and an oracle AVS use different evidentiary standards suited to how each actually fails.

SSV’s bApps model takes a narrower but arguably safer approach for the validator itself. Because validators opt in through separate participation keys rather than their withdrawal keys, the 32 ETH principal backing consensus is never at risk; only additional capital a validator or its delegators voluntarily commit to a given bApp can be slashed, and each bApp can dial its own risk tolerance up or down under SSV’s Risk Expressive Model. In practice, actual slashing events remain rare across every major platform, which cuts both ways: reassuring in that a young, thinly audited layer of financial middleware has not yet produced a wave of validator losses, but also a reminder that the logic securing billions of dollars simply has not been tested at scale.

Where Restaking Yield Actually Comes From

It helps to separate restaking yield into layers, because marketing materials rarely do. The base layer is ordinary Ethereum staking, which HOGE Wire has covered in detail in its explainer on how validators actually get paid: a native issuance yield in the high twos percent range, plus roughly half a percentage point to a percentage point more from MEV capture. Restaking adds a second layer on top, rewards paid by whichever AVS the capital is securing, which historically have been paid partly in the AVS’s own token and partly, for a long stretch of 2023 and 2024, in the form of speculative points that depositors hoped would convert into a valuable token airdrop later.

That points era is largely why so many restaking-linked tokens now trade so far below where early depositors likely expected. EIGEN sits about 96 percent below its all-time high, SSV about 97 percent below its own, and smaller DVT-adjacent tokens like Obol have fallen more than 99 percent from their peaks. The pattern is consistent: expectations built during a points-farming period ran well ahead of the fee revenue the underlying services could realistically generate once tokens actually launched and started trading. Real fee generation does exist. EigenDA has processed data availability traffic for a growing list of rollups and charges for it, but the dollar amounts involved remain modest next to the billions in restaked collateral nominally securing the ecosystem, which is exactly the gap ELIP-012’s fee-sharing and buyback design is trying to close.

A third layer exists purely in DeFi: because LRTs can be posted as collateral, users can loop a restaked position, borrow against it, buy more of the same asset, and redeposit, to amplify a base yield of a few percent into a much higher headline APY. That amplification also multiplies liquidation risk if the LRT’s price or peg wobbles even slightly, which is precisely the mechanism that turned a bridge exploit at Kelp DAO into a $196 million hole at Aave rather than a problem contained to one protocol.

Regulation: SEC Guidance, MiCA and the Gray Zone

US regulators have moved a long way on staking generally since early 2023, when the SEC settled charges against Kraken for $30 million over its staking-as-a-service program, treating it as an unregistered securities offering. In May 2025, the SEC’s Division of Corporation Finance concluded that protocol staking, whether solo, delegated, or through a custodian acting in a narrow administrative role, does not by itself involve a securities transaction under the Howey framework, a question HOGE Wire has covered in depth. Commissioner Hester Peirce backed the position with a companion statement titled “Providing Security is not a ‘Security.’” A follow-up statement in August 2025 explicitly extended that safe harbor to liquid staking and staking receipt tokens like stETH, closing one of the more obvious gaps in the original guidance.

A joint SEC-CFTC interpretive release in March 2026 went further still, laying out a shared taxonomy for digital commodities that both agencies say they will use going forward, with SEC Chair Paul Atkins framing the goal as drawing clear regulatory lines in clear terms. None of this guidance, however, was written with restaking or AVS operation specifically in mind. It remains an open question whether a restaking platform or LRT issuer that exercises real discretion over which AVS to allocate deposits to, or that promises a fixed return rather than a variable one, would still qualify for the same safe harbor that plain protocol staking now enjoys, particularly once broader legislative efforts like the CLARITY Act’s rewrite of SEC and CFTC jurisdiction actually take effect. In the European Union, a similar line shows up under MiCA: custodial staking or restaking-as-a-service offered to retail customers is likely to fall inside the licensing regime, while purely non-custodial interaction with a decentralized protocol generally sits outside it, though neither the SEC’s statements nor MiCA’s text resolve the restaking-specific question directly.

Risks and Open Questions

Restaking’s outstanding risks fall into a short list that has not really changed since Buterin’s original warning, even as the specific incidents have piled up:

• Smart contract and slashing-logic bugs in code that, by design, has not yet been tested at scale by a real, large slashing event
• Rehypothecation risk, where a liquid restaking token used as collateral elsewhere turns a localized bridge or protocol failure into a cross-protocol solvency event, as happened to Aave in April 2026
• Correlated exposure, where the same underlying ETH or BTC is restaked into multiple AVS simultaneously, so one bad actor or bug can trigger losses across several services at once
• Concentration, with EigenCloud still commanding the large majority of restaked value years after competitors like Symbiotic and Karak launched with genuinely different designs
• Token and yield sustainability, now that the speculative points-farming phase has given way to tokens trading well below their launch-era valuations
• Regulatory uncertainty over where custodial restaking services and LRT issuance fall once staking-specific safe harbors are tested against a product that layers in operator discretion and cross-chain bridging

None of this means restaking is a failed idea. EigenCloud, Symbiotic, Karak, SSV’s bApps and Babylon between them have built genuine infrastructure that is securing real services today, and the Kelp DAO recovery showed the ecosystem is at least willing to absorb a nine-figure loss rather than let it cascade further. But more than two years after Buterin’s original warning, the core tension he identified, more yield in exchange for more entangled, harder-to-reason-about risk, is still the honest way to describe what restaking is trading on. The sector’s next few years will likely be less about adding new categories of AVS and more about proving that the ones already live can generate durable fee revenue and survive a genuinely large slashing event without a repeat of the informal, goodwill-dependent rescue that saved Kelp DAO’s depositors in April 2026.

Frequently Asked Questions

What is restaking in crypto?

Restaking is the practice of taking capital that already secures a blockchain through staking, such as staked ETH or Bitcoin, and committing it a second time to secure additional services like oracles, bridges, data availability layers or rollups. In return for extra yield, the staker accepts extra slashing conditions tied to how well those additional services perform.

What are the risks of restaking?

The main risks are slashing for misbehavior at the extra service being secured, smart contract bugs in still-young restaking code, cascading losses if a liquid restaking token used as collateral elsewhere runs into trouble (as happened when Kelp DAO’s bridge was exploited in April 2026), and concentration risk if one protocol or operator ends up securing too much of the ecosystem at once.

What is the difference between staking and restaking?

Staking commits capital to secure one proof of stake network and earns that network’s native issuance and fees. Restaking takes the same already staked capital, or a liquid staking token representing it, and additionally commits it to secure other protocols through a middleware layer like EigenLayer, Symbiotic or SSV, layering extra yield on top of extra risk.

What is a liquid restaking token (LRT)?

A liquid restaking token is a receipt token, such as ether.fi’s eETH, Renzo’s ezETH, Puffer’s pufETH or Kelp DAO’s rsETH, issued when a user deposits ETH or a liquid staking token into a restaking protocol. It represents the underlying restaked position while remaining tradeable and usable as collateral elsewhere in DeFi, which is convenient but adds rehypothecation risk.

Can you restake Bitcoin?

Yes. Babylon lets Bitcoin holders lock BTC directly using Bitcoin’s own scripting capabilities, without wrapping the coin or bridging it to another chain, and use that locked BTC to help secure proof of stake networks that opt into Babylon’s system. It had roughly 56,850 BTC staked as of mid-2026, according to Babylon’s own dashboard.

Written by the HOGE Wire markets desk.