restaking

Restaking is the practice of redeploying staking rewards or existing stake to secure additional tokens or protocols. In proof-of-stake networks, validators and delegators earn rewards by locking up tokens; restaking refers to reinvesting those rewards or the stake itself into further staking activity, often through automated contracts or staking-as-a-service platforms. The goal is to compound returns or expand security by enabling the same stake to back multiple protocols.

Mechanisms include auto-compounding within a single network, where rewards are automatically staked again, and cross-protocol restaking, where staked assets are used to secure separate networks or applications through a restaking-enabled protocol. A notable recent form is cross-protocol restaking, sometimes described as shared security, which seeks to leverage Ethereum's staking backbone to bolster additional protocols using services such as Eigenlayer.

Benefits of restaking include higher effective yields for stakers, improved capital efficiency, and the potential enhancement of network security due to more stake serving multiple protocols. However, restaking also carries risks, such as an increased attack surface if restaked security is compromised, slashing and liquidation risk that can propagate, liquidity constraints, governance and centralization concerns, regulatory uncertainty, and smart contract risk.

Stakeholders and platforms vary, with staking providers sometimes offering restaking as a feature and individual stakers able to participate through pools or delegated services. The development of restaking ecosystems continues to influence how capital is allocated and how security is distributed across multiple networks and applications.