Is restaking the possible future of DeFi?

Intermediate

2025-06-26

Decentralized finance (DeFi) is a rapidly advancing domain—one where continuous innovation is not merely a hallmark, but an existential imperative. As the sector grows more sophisticated, the demand for scalable, secure, and capital-efficient infrastructure intensifies, prompting the emergence of novel paradigms designed to overcome structural bottlenecks.

Among the most compelling of these is none other than restaking—an evolving mechanism that seeks to extend the utility of staked assets far beyond their original function. Positioned at the intersection of security provisioning, liquidity optimization, and protocol interoperability, restaking introduces a new economic coordination layer with potentially far-reaching implications for the architecture of Web3.

The question now facing developers, institutions, and individual participants alike is this: Is restaking merely a transient innovation, or could it serve as a foundational pillar in DeFi’s next evolutionary phase?

At Toobit Academy, we believe this is a question worth exploring in depth. Let's get into today's article:

What is restaking?

At its core, restaking refers to the process of reusing staked assets—such as ETH already committed to Ethereum’s validator set—to secure additional protocols, services, or execution layers. While traditional staking involves locking assets into a consensus mechanism to earn rewards for maintaining the integrity of a single blockchain, restaking allows those same assets to be “re-staked” and used to extend cryptoeconomic security to multiple systems simultaneously.

This concept has been brought to the forefront by EigenLayer, a middleware protocol built on Ethereum. EigenLayer enables ETH stakers or liquid stakers (via protocols like Lido or Rocket Pool) to opt in and delegate their staked capital to external modules—such as oracles, bridges, or rollups—thereby earning additional yield while contributing to the broader ecosystem's security and reliability.

The adoption of this paradigm has been anything but theoretical. The inflow of capital has been staggering, with EigenLayer's Total Value Locked (TVL) surging to over $11 billion by early 2025, according to data from DeFiLlama.

This makes it one of the largest and most influential protocols on the Ethereum network.

This capital is not idle; it is actively securing a growing ecosystem of more than a dozen Actively Validated Services (AVSs), demonstrating clear market appetite for shared security. In essence, restaking transforms passive capital into programmable security infrastructure, enabling a shared security model across multiple decentralized services.

Why does restaking matter?

The appeal of restaking lies not only in its technical novelty, but in its ability to address some of the most persistent inefficiencies in DeFi today. Let’s examine its most significant advantages.

Enhanced capital efficiency

DeFi suffers from widespread capital fragmentation. Liquidity providers must often choose between staking assets for security or using them in lending, yield farming, or liquidity provision. Restaking disrupts this binary choice by unlocking additional utility from already staked assets.

For instance, a user who has staked ETH to earn base protocol rewards can now opt into EigenLayer and simultaneously secure a data availability layer or oracle protocol—earning incremental rewards without allocating new capital. This multi-use deployment of the same capital significantly boosts the overall return on investment and improves system-wide efficiency.

Accelerated bootstrapping of new protocols

New protocols—particularly those offering infrastructure services like rollups, bridges, oracles, or off-chain computation—require substantial trust and security guarantees to gain adoption. Traditionally, these projects would need to establish their own validator sets or incentivize external actors through costly token distributions.

Restaking removes that barrier by enabling these protocols to inherit Ethereum’s economic security directly. For example, a rollup chain could rest on a foundation of restaked ETH instead of launching with its own token or validator incentives, thereby drastically reducing bootstrapping costs and timelines.

The impact of this model is most evident in the sheer diversity of services now securing themselves with restaked ETH. The AVS ecosystem is no longer a monolith, but a collection of specialized infrastructure.

Prominent categories include Data Availability (DA) layers like EigenDA, which helps rollups lower transaction costs; interoperability protocols like Omni and Hyperlane that act as secure bridges between chains; and decentralized sequencers that aim to decentralize transaction ordering for Layer 2s.

The ecosystem also features novel use cases like ZK co-processors, decentralized AI inference networks, and oracle services, proving that restaking is becoming the de-facto security launchpad for a wide spectrum of Web3 innovation

Incentivized innovation and protocol composability

By layering new revenue opportunities on top of Ethereum staking, restaking provides developers and users with new incentive structures. Middleware projects can now build secure services without reinventing consensus mechanisms. Meanwhile, stakers benefit from stackable yield opportunities—a powerful incentive in a competitive DeFi environment.

This dynamic encourages experimentation, especially with modular blockchain designs, where consensus, execution, and data availability are handled by distinct layers that communicate via standardized interfaces.

Advantages and disadvantages of restaking

Although restaking offers significant potential, it also entails complex risks that require careful consideration; especially from traders who are new to the scene. Make sure to understand all the possible risks of restaking, as doing your own due diligence is a big part of trading.

Advantages of restaking

Capital efficiency: Reuse of existing staked capital across multiple networks.
Security sharing: Access to Ethereum’s trust layer for smaller protocols.
Reduced bootstrapping costs: No need for new tokens or validator sets.
Stacked incentives: Yield generation from multiple sources without increased capital outlay.

Disadvantages of restaking

Risk stacking and slashing cascades: Restakers are now exposed to the performance of multiple protocols. If one misbehaves (e.g., a faulty bridge module), stakers may be penalized—even if Ethereum remains uncompromised. This compounds slashing risks and creates uncertainty around loss attribution.

Systemic centralization risks: If a single restaking protocol like EigenLayer becomes too dominant, its failure could have network-wide repercussions, compromising not just one service but an entire suite of dependent applications. As of the first quarter of 2025, EigenLayer itself is the foundational layer for nearly all restaking activity. Within the liquid restaking sector, which represents the majority of user deposits, the concentration is even more pronounced. The top three LRT protocols—Ether.fi, KelpDAO, and Renzo—collectively control over 70% of the entire liquid restaking market. This means that any operational failure, vulnerability, or critical governance decision within this small handful of dominant protocols could create cascading effects across the dozens of services that depend on them for security.

Regulatory scrutiny: As restaking starts to resemble complex financial engineering—blending elements of staking, lending, and derivatives—it is likely to attract regulatory attention. Jurisdictions may classify certain restaking services as securities or require compliance frameworks.

How would restaking shape the future of DeFi?

Restaking is more than a niche yield enhancement strategy; it has the potential to act as a new meta-layer for decentralized security and coordination.

As modular blockchains become more prevalent—where computation, storage, consensus, and settlement are disaggregated—restaking allows these components to interoperate under shared security assumptions.

Real-world scenarios enabled by restaking

We have put together a list of a few real-life scenarios that use restaking. These examples range from bolstering the security of actively validated services (AVSs), to facilitating decentralized computation, and enabling new forms of decentralized finance (DeFi).

Enhanced security for actively validated services (AVSs):

Security as a service (SaaS)

Restaking protocols like EigenLayer allow AVSs (like oracles, bridges, or rollups) to tap into the pooled security of Ethereum's staked ETH, reducing the need for them to establish their own separate, potentially weaker, security infrastructure.

Reduced risk for new protocols

New protocols and networks often struggle to establish robust security systems. Restaking provides them with immediate access to a large pool of validators, significantly strengthening their security from the outset.

Decentralized computation and Data Availability

Secure multi-party computation (sMPC)

Restaking can enable secure and private computations by allowing multiple parties to participate in computations without revealing their individual inputs.

Decentralized AI inference

Restaking can facilitate AI inference on decentralized networks by distributing computation tasks across multiple nodes, improving efficiency and reducing the risk of central point failures.

ZKTLS and web proofs

Restaking can enhance the security of private information verification through ZK-Rollups and Web Proofs, ensuring data integrity and privacy.

Innovative DeFi applications

Liquid restaking

Users can leverage liquid staking tokens (LSTs) to participate in restaking, earning additional rewards while maintaining the liquidity of their original staked assets.

The market has overwhelmingly favored this liquid approach. In fact, the rise of Liquid Restaking Tokens (LRTs) has been a dominant narrative, with the total market cap for these assets exceeding $11.5 billion.

Data from early 2025 shows that a few key protocols have captured the lion's share of this market. Ether.fi leads the pack with a TVL of over $6.3 billion, followed by other major players like KelpDAO with over $1.1 billion and Renzo with approximately $950 million.

Enhanced yield opportunities

Restaking allows users to earn rewards from multiple sources by utilizing their staked assets across various platforms and services.

Composability and interoperability

Restaking promotes composability within the DeFi ecosystem, allowing developers to build upon existing restaking infrastructure and create more complex financial products.

Other potential use cases of restaking

Proof-of-location

Restaking can be used to verify the physical location of users or devices, enhancing the security of location-based services.

MEV networks

Restaking can contribute to the security and efficiency of Maximal Extractable Value (MEV) networks by providing a more robust validator set.

Overall, this composability dramatically lowers the cost and complexity of launching secure decentralized systems, making it easier for developers to build infrastructure and for users to trust it.

Conclusion

Restaking is still in its early stages, but its long-term potential is both significant and transformative. By enabling the reuse of economic security across multiple layers and protocols, restaking addresses key inefficiencies in today’s DeFi infrastructure. It introduces powerful new design patterns while encouraging capital efficiency, interoperability, and innovation.

However, as with any emerging mechanism, its success will depend on responsible design, robust risk management, and transparent governance. Stakeholders must be vigilant against centralization risks and overly aggressive financialization.

Still, if adoption continues to accelerate and implementation challenges are thoughtfully addressed, restaking may not simply complement DeFi—it may underpin its next architectural leap.

At Toobit Academy, we’ll be watching closely as this space evolves—and we encourage our readers to do the same! We hope you enjoyed this week's article. Make sure to stay tuned for more articles on crypto, blockchain, DeFi, NFTs, and cutting-edge technologies shaping the future of finance.