What is Liquid Restaking?
A comprehensive, fact-based guide to liquid restaking: how it extends staked assets to secure new services (AVSs), how LRTs work, benefits, risks, protocols, and reliable sources for further research across DeFi and Ethereum.
What is Liquid Restaking?
Investors and builders asking what is Liquid Restaking are encountering a fast-evolving security and incentive design that lets stakers extend their contribution to blockchain networks while preserving on-chain liquidity. In simple terms, it enables users who already staked assets—often Ether (ETH) via liquid staking tokens (LSTs)—to “re-stake” those positions to secure additional services and earn extra rewards without fully locking funds again.
Introduction
The idea builds on the success of liquid staking, where holders deposit funds into a protocol, receive a transferable receipt token, and continue using that token across decentralized finance. Liquid restaking applies a similar concept to restaking frameworks (most notably EigenLayer on Ethereum), creating a liquid representation of restaked positions that can move across DeFi while still helping secure auxiliary networks and services. Prominent examples include liquid restaking tokens (LRTs) such as eETH (EETH), rsETH (RSETH), ezETH (EZETH), weETH (WEETH), and swETH (SWETH), each introduced by specialized protocols.
At its core, liquid restaking leverages the proof-of-stake model and validator rules—participants lock assets, operate or delegate to network validators, and follow slashing conditions—to extend security to additional services known as Actively Validated Services (AVSs). This “shared security” model is grounded in well-established staking mechanics documented by Ethereum’s proof-of-stake overview and industry resources that explain staking, slashing, and validator responsibilities. For background on staking and PoS, see Ethereum’s official documentation and general primers from established finance references:
- Ethereum.org on proof-of-stake: https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/
- Investopedia on staking and PoS: https://www.investopedia.com/terms/p/proof-stake-pos-cryptocurrency.asp
As interest grows, traders often compare potential yields, security assumptions, and liquidity across LRTs. You can review market data for major liquid staking tokens like stETH (STETH) on CoinGecko and CoinMarketCap, both widely used market data providers:
- stETH on CoinGecko: https://www.coingecko.com/en/coins/lido-staked-ether
- stETH on CoinMarketCap: https://coinmarketcap.com/currencies/lido-staked-ether/
If you want to learn more about foundational blockchain concepts, see these educational pages:
- Blockchain basics: https://cube.exchange/what-is/blockchain
- Proof of Stake: https://cube.exchange/what-is/proof-of-stake
- Validator roles: https://cube.exchange/what-is/validator
- Slashing risks: https://cube.exchange/what-is/slashing
- Liquid Staking: https://cube.exchange/what-is/liquid-staking
You can also access and trade core assets that underpin liquid restaking. For example, you can trade Ether ETH directly on Cube.Exchange: https://cube.exchange/trade/ethUSDT, or explore LSTs such as STETH and restaked derivatives like RETH and CBETH.
Definition & Core Concepts
Liquid restaking is a mechanism that combines two ideas:
- Restaking: Re-pledging already staked assets—often LSTs like stETH—to secure additional networks or services (AVSs), with slashing conditions enforced via the underlying restaking framework. EigenLayer is the leading framework that popularized this model on Ethereum, as documented in its official docs: https://docs.eigenlayer.xyz/.
- Liquidity: Issuing a liquid token representing the restaked position (an LRT) so holders can move, trade, or deploy that position in DeFi without first exiting the restaking commitment.
Through liquid restaking, a staker can keep exposure to the base staking yield while potentially earning supplemental rewards for contributing to the security of AVSs. AVSs might include data availability layers, oracle networks, decentralized sequencing layers for rollups, and other services that require reliable, economically secured validation. EigenLayer’s docs also describe EigenDA, a data availability service secured by restaked capital: https://docs.eigenlayer.xyz/eigenda/overview.
From a security standpoint, liquid restaking inherits the incentive alignment of proof-of-stake systems: capital at risk, validator rules, attestations, and slashing penalties. For foundational consensus concepts that underlie these systems, see:
- Consensus layers and safety/liveness: https://cube.exchange/what-is/consensus-layer, https://cube.exchange/what-is/safety-consensus, https://cube.exchange/what-is/liveness
- Attestation, checkpoints, and quorum: https://cube.exchange/what-is/attestation, https://cube.exchange/what-is/checkpoint, https://cube.exchange/what-is/quorum
Because liquid restaking often involves Ethereum-based assets, Ether ETH is the common denominator. However, today’s liquid restaking products increasingly support multiple LSTs and produce distinct LRTs, such as eETH (EETH) by Ether.fi, rsETH (RSETH) by Kelp DAO, ezETH (EZETH) by Renzo, weETH (WEETH) by Ether.fi (wrapped eETH), and swETH (SWETH) by Swell. Official resources include:
- Ether.fi docs (eETH/weETH): https://docs.ether.fi/
- Renzo docs (ezETH): https://docs.renzoprotocol.com/
- Kelp DAO docs (rsETH): https://docs.kelpdao.xyz/
- Swell docs (swETH): https://docs.swellnetwork.io/
For market context and analytics, research providers like Binance Research have published overviews of restaking trends and risks: https://research.binance.com/en/analysis/restaking. Messari also covers liquid staking and related protocols; for example, see Lido DAO’s Messari profile: https://messari.io/asset/lido-dao.
How It Works
The workflow generally follows these steps:
- Stake or acquire an LST
- Many users start by staking Ether to receive an LST, such as Lido’s stETH STETH, Rocket Pool’s rETH RETH, or Coinbase’s cbETH CBETH. Official resources: Lido (https://lido.fi/), Rocket Pool (https://rocketpool.net/), Coinbase cbETH (https://help.coinbase.com/en/coinbase/getting-started/crypto-education/what-is-cbeth).
- Alternatively, users may directly buy LSTs on exchanges or DeFi markets. You can trade Ether ETH and consider LST exposure through supported venues.
- Opt into a restaking framework
- Within EigenLayer, users “deposit” their native ETH or LSTs into restaking contracts (see official docs: https://docs.eigenlayer.xyz/). This action makes that stake eligible for additional duties tied to AVSs.
- Users typically delegate to an operator who actually runs the infrastructure. Operator selection, performance, and risk management are critical.
- Choose AVSs and risk settings
- Users or their chosen operators opt into specific AVSs (e.g., data availability layers like EigenDA). Each AVS sets its own rules and slashing conditions. Participation requires agreement to these conditions.
- Receive a liquid restaking token (LRT)
- Many liquid restaking protocols mint an LRT that represents the user’s restaked position. Examples include eETH (EETH), rsETH (RSETH), ezETH (EZETH), weETH (WEETH), and swETH (SWETH). These LRTs can circulate across DeFi.
- Earn rewards and manage risks
- Users aim to accumulate a blend of base staking yield and AVS-driven rewards, net of fees. However, if a validator misbehaves or fails availability requirements, slashing may occur—reducing the underlying stake and, by extension, the LRT’s backing. This is consistent with broader slashing concepts: https://cube.exchange/what-is/slashing.
- Redeem or unwind
- Exiting restaking may involve unbonding delays, exit queues, and settlement rules aligned with Ethereum’s PoS and the specific LST/LRT protocol. Liquidity on secondary markets can help, but market conditions and potential discount/premium dynamics apply.
Throughout the lifecycle, fundamentals like transaction costs, gas, and finality apply (see https://cube.exchange/what-is/gas and https://cube.exchange/what-is/finality). Most liquid restaking is anchored to Ethereum for settlement and consensus, leveraging its security and validator set.
As an example of assets and symbols used in this ecosystem, you may encounter the following in research or trading interfaces:
- Ether ETH
- stETH STETH
- Rocket Pool ETH RETH
- Coinbase Wrapped Staked ETH CBETH
- Ether.fi eETH EETH
- Kelp DAO rsETH RSETH
- Renzo ezETH EZETH
- Ether.fi weETH WEETH
- Swell swETH SWETH
If your investment, trading, or hedging strategy revolves around exposure to these assets, always consider liquidity, spreads, and price impact (see https://cube.exchange/what-is/spread and https://cube.exchange/what-is/price-impact). You can directly trade Ether ETH on Cube.Exchange.
Key Components
- Restaking framework: A set of smart contracts and processes that make a stake eligible to secure AVSs while enforcing slashing across services. EigenLayer is the primary example as of today (docs: https://docs.eigenlayer.xyz/).
- Actively Validated Services (AVSs): Systems that rely on economically bonded validators to maintain liveness and correctness. Examples include data availability networks (e.g., EigenDA), oracle networks, decentralized sequencers, and interoperability layers. Learn more about related primitives: https://cube.exchange/what-is/oracle-network, https://cube.exchange/what-is/price-oracle, https://cube.exchange/what-is/shared-sequencer, https://cube.exchange/what-is/interoperability-protocol.
- Operators: Entities running nodes that perform validation tasks for AVSs. Operator diversity and performance are key to safety. Stake is often delegated to operators, who must follow AVS-specific rules. For node-level background, see https://cube.exchange/what-is/blockchain-node and https://cube.exchange/what-is/full-node.
- Liquid Restaking Tokens (LRTs): Transferable tokens representing a claim on restaked collateral and its rewards. For example, eETH (EETH), rsETH (RSETH), ezETH (EZETH), weETH (WEETH), and swETH (SWETH). These tokens aim to maintain a predictable relationship to their underlying restaked collateral while remaining fluid in DeFi.
- Liquid Staking Tokens (LSTs): Existing primitives that represent staked assets. Common LSTs include stETH STETH, rETH RETH, cbETH CBETH, and sfrxETH SFRXETH. Official protocol sources: Lido (https://lido.fi/), Rocket Pool (https://rocketpool.net/), Coinbase (https://help.coinbase.com/en/coinbase/getting-started/crypto-education/what-is-cbeth), and Frax (https://docs.frax.finance/frax-ether/frxeth).
- Risk and slashing rules: Policy definitions determine when and how stake can be slashed, propagating consequences to LRT holders. Core consensus risks and slashing are covered at https://cube.exchange/what-is/slashing and https://cube.exchange/what-is/consensus-layer.
- Tokenomics and governance: Some LRT protocols may feature governance mechanisms, fee structures, or incentive schedules. General background: https://cube.exchange/what-is/governance-token and https://cube.exchange/what-is/vetokenomics.
- Market infrastructure: Secondary markets, AMMs, lending protocols, and risk engines that support trading, leverage, and hedging around LRTs. See https://cube.exchange/what-is/decentralized-exchange and https://cube.exchange/what-is/automated-market-maker for market structure basics.
In practice, the most referenced base asset remains Ether ETH. LRTs built on ETH often reference LSTs like stETH STETH and rETH RETH, but diversity is growing.
Real-World Applications
- Data availability for rollups: AVSs such as EigenDA provide scalable data availability backed by restaked collateral, which can improve throughput and reduce costs for rollups. For background on rollups, see https://cube.exchange/what-is/rollup and https://cube.exchange/what-is/zk-rollup.
- Oracle networks: Restaked validators can secure data feeds and price oracles, improving liveness and reducing manipulation risks. See oracles and data feeds: https://cube.exchange/what-is/oracle-network and https://cube.exchange/what-is/data-feed.
- Shared sequencing: Rollups may rely on shared sequencers to reduce censorship and improve interoperability. Restaking can extend security to these shared layers. Learn more: https://cube.exchange/what-is/shared-sequencer.
- Interoperability and bridging: Message passing and bridges can benefit from additional economic security supplied by restaked collateral, though bridging carries unique risks. See https://cube.exchange/what-is/cross-chain-bridge and https://cube.exchange/what-is/bridge-risk.
- Security bootstrapping for new services: New protocols can “rent” security from an existing PoS base by tapping into restaked capital, potentially accelerating bootstrapping. For a research perspective, refer to Binance Research’s analysis: https://research.binance.com/en/analysis/restaking and EigenLayer docs: https://docs.eigenlayer.xyz/.
In all these cases, liquid restaking attempts to balance security and capital efficiency, letting users retain utility while their staked capital supports multiple networks. Popular assets you might encounter in these use cases include Ether ETH, stETH STETH, and LRTs like eETH EETH and rsETH RSETH.
Benefits & Advantages
- Capital efficiency: Liquid restaking lets users extract more utility from the same underlying staked capital. Rather than choosing between base staking or providing security to a new service, users can often do both. This is particularly relevant for Ether ETH holders.
- Liquidity: The issuance of an LRT allows holders to remain flexible—using their token in DeFi while still securing AVSs. Liquidity often improves price discovery and portfolio rebalancing.
- Composability: LRTs can be integrated into lending markets, DEX pools, and structured products. Examples include pairing eETH EETH, ezETH EZETH, or weETH WEETH in liquidity pools, or using them as collateral where supported.
- Security sharing: AVSs can “borrow” security from a large base of restaked assets—potentially improving decentralization and network resilience compared to bootstrapping security from zero.
- Potentially diversified rewards: Users may receive base staking yield plus AVS incentives, protocol incentives, and fees—subject to tokenomics and market conditions. See https://cube.exchange/what-is/staking-rewards for a primer.
- Market access and trading: Because LRTs are transferable, traders can adjust exposures dynamically. You can trade Ether ETH when rebalancing or hedging around restaked positions.
- Ecosystem growth: With more services secured by shared stake, Web3 infrastructure can expand while maintaining clear accountability via slashing. This may foster innovation across DeFi and Layer 2 ecosystems.
Challenges & Limitations
- Slashing contagion and correlated risk: Restaking spreads the same capital across multiple services. If a widely used operator or AVS suffers an incident, slashing can propagate across many positions simultaneously, impacting LRT holders. This risk is documented conceptually in EigenLayer resources: https://docs.eigenlayer.xyz/.
- Smart contract risk: Liquid restaking involves multiple smart contracts—LST contracts, restaking framework contracts, and LRT wrappers. Bugs or design flaws can lead to loss. Formal audits, bug bounties, and secure engineering practices are essential. See https://cube.exchange/what-is/bug-bounty and https://cube.exchange/what-is/formal-verification.
- Liquidity and peg risk: LRTs may trade at a premium or discount to their implied backing, especially during stress. Liquidity fragmentation across DEXs and bridges can exacerbate volatility. Traders must consider slippage: https://cube.exchange/what-is/slippage.
- Operator centralization: Delegation patterns can concentrate power among a few operators, raising censorship and liveness concerns. Client diversity also matters: https://cube.exchange/what-is/client-diversity.
- Complexity for users: Understanding AVS-specific rules, exit queues, and slashing conditions requires study. Users should rely on official documentation and reputable research (e.g., Binance Research: https://research.binance.com/en/analysis/restaking) before allocating significant capital.
- Regulatory and tax considerations: Liquid restaking may have jurisdiction-specific implications. Participants should consult applicable regulations and remain aware of evolving guidance.
- MEV and cross-domain dynamics: Cross-domain MEV and sequencing policies can affect incentives and fairness. See https://cube.exchange/what-is/cross-domain-mev and https://cube.exchange/what-is/mev-protection.
These risks underscore the need for careful due diligence. If you maintain exposure via Ether ETH, stETH STETH, or rsETH RSETH, consider depth of market and risk buffers: https://cube.exchange/what-is/depth-of-market and https://cube.exchange/what-is/risk-engine.
Industry Impact
Liquid restaking introduces a modular security marketplace to the broader blockchain economy. Rather than each new network bootstrapping a validator set and economic security from scratch, AVSs can source security from existing staked capital pools. This can accelerate the deployment of rollups, oracles, interoperability layers, and specialized services. In the Ethereum ecosystem, this trend complements scaling approaches like rollups, data availability improvements, and shared sequencing.
From a market standpoint, LRTs extend the investable universe beyond LSTs. Traders can consider relative-value opportunities between LSTs and LRTs, staking rates, AVS incentives, and liquidity across venues. Market data sources like CoinGecko (e.g., stETH: https://www.coingecko.com/en/coins/lido-staked-ether) and research hubs like Messari (e.g., Lido DAO profile: https://messari.io/asset/lido-dao) can help contextualize trends. The presence of transferable LRTs such as eETH EETH, weETH WEETH, ezETH EZETH, rsETH RSETH, and swETH SWETH increases composability with DeFi, encouraging experimentation with structured products and hedging strategies.
For Ethereum, liquid restaking can strengthen the network effect of proof-of-stake by allowing capital to support multiple services while maintaining slashing-based accountability. However, correlated risk and governance design will determine long-term resilience. Thoughtful operator selection, client diversity, and transparent AVS policies are essential. Institutions evaluating allocation to LRTs may consider diversification across tokens, operators, and AVSs while maintaining liquid base exposure through Ether ETH.
Future Developments
- More AVSs and use cases: Expect more data availability services, oracle frameworks, and shared sequencing systems to tap restaked security, guided by documentation like EigenLayer’s AVS model (https://docs.eigenlayer.xyz/).
- Risk frameworks and standardization: The community is exploring standardized risk disclosures, clearer slashing policies, and certification for operators. Binance Research highlights the importance of risk management in restaking: https://research.binance.com/en/analysis/restaking.
- Enhanced liquidity venues: LRT-specific liquidity pools, lending markets, and derivatives will likely deepen. Traders may find more pairs for eETH EETH, ezETH EZETH, rsETH RSETH, weETH WEETH, and swETH SWETH. Consider spreads and fees while trading Ether ETH.
- Better withdrawal and exit options: Protocols may streamline exit processes from restaking and LRT redemption to reduce friction during volatile markets.
- Security hardening: Expect continuous audits, formal verification, and bug bounties across LSTs, restaking frameworks, and LRT wrappers. See https://cube.exchange/what-is/formal-verification and https://cube.exchange/what-is/bug-bounty.
- Cross-chain expansion with caution: While Ethereum is the primary base, some designs may explore cross-chain interoperability. Builders must heed bridge risks and oracle dependencies: https://cube.exchange/what-is/bridge-risk and https://cube.exchange/what-is/oracle-dependent-protocol.
As development advances, official docs, industry research, and reputable data providers remain your best sources for verified, up-to-date information—EigenLayer (https://docs.eigenlayer.xyz/), Binance Research (https://research.binance.com/en/analysis/restaking), CoinGecko (https://www.coingecko.com/), CoinMarketCap (https://coinmarketcap.com/), and Messari (https://messari.io/).
Conclusion
Liquid restaking is a security and incentive process that lets stakeholders extend their staked capital to support additional services while preserving liquidity. It combines the discipline of proof-of-stake—bonded capital, validator rules, and slashing—with the flexibility of transferable tokens. Through restaking frameworks like EigenLayer, users and operators can opt into AVSs such as data availability, oracles, and shared sequencing. LRTs like eETH EETH, rsETH RSETH, ezETH EZETH, weETH WEETH, and swETH SWETH aim to make these positions liquid and composable across DeFi.
The model offers notable advantages—capital efficiency, liquidity, composability, and security sharing—yet introduces non-trivial risks: correlated slashing, smart contract complexity, liquidity dislocations, and operator centralization. Participants should study official documentation, risk disclosures, and independent research, and make prudent use of liquid markets for portfolio management. If you’re trading the underlying asset, you can access Ether ETH on Cube.Exchange and explore educational resources such as proof-of-stake, validators, and slashing in the links above.
Frequently Asked Questions
- How is liquid restaking different from liquid staking?
- Liquid staking issues a token (LST) representing staked assets and their base staking rewards. Liquid restaking goes further by using that staked position (or native ETH) to secure additional services (AVSs) through a restaking framework, often issuing a new token (LRT) representing the restaked position. For example, stETH STETH is a liquid staking token, while eETH EETH and rsETH RSETH are liquid restaking tokens.
- What are AVSs and why do they matter?
- Actively Validated Services are applications that require validators to provide security guarantees—e.g., data availability, oracles, or shared sequencers. Restaked collateral helps these services borrow security from Ethereum’s staking base. See EigenLayer docs: https://docs.eigenlayer.xyz/.
- Which assets are commonly used in liquid restaking?
- Ether ETH is the dominant base asset. Popular LSTs include stETH STETH, rETH RETH, and cbETH CBETH. LRTs include eETH EETH, weETH WEETH, ezETH EZETH, rsETH RSETH, and swETH SWETH.
- What are the main risks?
- Slashing across multiple AVSs, smart contract vulnerabilities, peg and liquidity risk for LRTs, operator concentration, and bridging/oracle risks in cross-domain settings. Review slashing basics: https://cube.exchange/what-is/slashing.
- How do I earn with liquid restaking?
- Potential rewards can include base staking yield plus AVS incentives and protocol fees, net of costs. Outcomes vary by protocol tokenomics, operator performance, and market conditions. Always consult official docs and research (e.g., https://research.binance.com/en/analysis/restaking and https://docs.eigenlayer.xyz/).
- Can I trade liquid restaking tokens?
- Yes, many LRTs trade on DEXs and some centralized venues. Liquidity varies. You can trade Ether ETH and use it to acquire LSTs/LRTs where supported. Monitor spreads and price impact.
- How do withdrawals and redemptions work?
- Exiting restaking can involve withdrawal queues and unbonding periods, plus any LRT-specific redemption mechanics. Liquidity on secondary markets may help, but prices can vary during stress.
- Are liquid restaking yields guaranteed?
- No. Yields depend on validator performance, AVS incentives, fees, and on-chain conditions. Slashing or technical incidents can reduce returns or principal.
- Where can I find reliable data?
- Official docs (e.g., EigenLayer: https://docs.eigenlayer.xyz/), protocol sites (Lido: https://lido.fi/, Rocket Pool: https://rocketpool.net/), research hubs (Binance Research: https://research.binance.com/en/analysis/restaking, Messari: https://messari.io/), and data providers (CoinGecko: https://www.coingecko.com/, CoinMarketCap: https://coinmarketcap.com/). For stETH market data: https://www.coingecko.com/en/coins/lido-staked-ether.
- What is the difference between eETH and weETH?
- eETH EETH is Ether.fi’s liquid restaking token, while weETH WEETH is its wrapped version that can improve DeFi integrations. See Ether.fi docs: https://docs.ether.fi/.
- How does liquid restaking affect Ethereum security?
- It may strengthen Ethereum’s role as a security hub by allowing stake to secure more services, but it also concentrates risk if many AVSs depend on the same operators. Operator diversity and strong slashing policies are crucial. See PoS background: https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/.
- What are best practices for choosing an LRT?
- Review the protocol’s audits, AVS participation, operator set, redemption process, and liquidity profile. Evaluate tokenomics, fees, and governance. Examples include eETH EETH, rsETH RSETH, ezETH EZETH, and swETH SWETH.
- Can I use LRTs as collateral?
- Some lending protocols may accept LRTs as collateral, though terms vary and risk parameters can be conservative due to slashing/peg risks. Always check protocol documentation and consider overcollateralization concepts: https://cube.exchange/what-is/overcollateralization.
- Is liquid restaking only on Ethereum?
- The most mature implementations are on Ethereum today, given its large validator base and tooling. Cross-chain experimentation exists, but bridge and oracle dependencies increase risk. See https://cube.exchange/what-is/cross-chain-bridge and https://cube.exchange/what-is/oracle-dependent-protocol.
- How can I start if I only hold ETH?