Restaking: The New Frontier of Cryptoeconomic Security

In DeFi world, the concept of restaking has emerged as a transformative force, reshaping the traditional understanding of staking within blockchain networks. In this article, we will be taking a closer look at what restaking is, how it works, and what kinds of leading decentralized applications (DApps) you should try your hands on to get in on this innovative sector.

 

What is Restaking?

Restaking, an evolved iteration of staking, involves a strategic reinvestment or redeployment of staked assets within blockchain networks. At its essence, staking implies locking up assets as collateral to support network operations and security, thereby earning rewards. Restaking takes this process further by allowing participants, termed restakers, to leverage their staked tokens dynamically. Instead of passively holding the stake, restakers redeploy their assets across multiple protocols or layers within the blockchain network, maximizing their utility and potential.

 

The Need for Restaking

The necessity for restaking becomes evident considering its multifaceted advantages.

Firstly, it extends Ethereum's PoS security model to safeguard various distributed systems, thereby enhancing the overall security infrastructure of the crypto ecosystem. By allowing staked assets from Ethereum to bolster security in other ecosystems, it creates a ripple effect, elevating the overall security posture of interconnected protocols and platforms. This broader security reinforcement reduces vulnerabilities across diverse applications, such as bridges, sequencers, data availability layers, and even different blockchains that rely on various forms of consensus.

Secondly, it reduces barriers for users and protocols seeking to benefit from Ethereum's security without developing their own consensus mechanisms, fostering interoperability and innovation. Typically, developing an independent consensus mechanism demands significant resources, time, and expertise, deterring many innovative projects from entering the market. Restaking simplifies this process by enabling these entities to leverage Ethereum's robust security without the need to establish their own consensus mechanisms. This not only reduces development complexities but also opens doors for smaller projects and startups to access top-tier security infrastructure, leveling the playing field for innovation.

Moreover, by embracing restaking, protocols and projects can seamlessly integrate and interact with Ethereum's security framework. This interoperability nurtures a collaborative environment where different blockchain ecosystems and DApps can communicate and share resources. As a result, it fuels innovation by encouraging the creation of cross-chain applications and fostering a network effect that benefits the entire decentralized finance (DeFi) landscape.

 

How Restaking Works

Restaking functions on the principle of rehypothecating staked assets, enabling users to extend the benefits and security of their locked tokens to various protocols or layers within the blockchain. Restakers actively contribute their staked assets to fortify the security of DApps or other blockchain infrastructure beyond the initial network where the assets were staked. This dynamic approach allows for a more diversified and active participation in the blockchain ecosystem.

 

Explore Restaking with Bitget Wallet Today!

Bitget Wallet currently supports a wide variety of leading DApps in the restaking sector. To view a comprehensive list of restaking DApps, simply follow the steps below.

Step 1: Tap on "DApp" on your Bitget Wallet home page to jump to Bitget Wallet's DApp browser.

Step 2: Scroll down to the "Restaking Zone" and tap on "View All" to see a full list of supported restaking DApps. Alternatively, you may also key in the DApp's name or URL in the search field at the top.

Step 3: Select your restaking DApp of choice to immediately jump to the DApp.

Interested in exploring more about restaking but not sure where to start? Not to worry, we've got you covered with a list of leading restaking DApps that you can start exploring right from your Bitget Wallet!

 

EigenLayer

EigenLayer stands as a trailblazing protocol at the forefront of restaking innovation. It introduces a groundbreaking mechanism that empowers users to amplify the security of their staked Ethereum (ETH) across multiple decentralized systems and applications built on the Ethereum network. EigenLayer's innovation lies in its ability to aggregate staked ETH, offering validation services to an array of applications, consolidating security resources, and reducing fragmentation within the Ethereum ecosystem.

Through the utilization of EigenLayer's cutting-edge restaking mechanism, participants make the deliberate choice to redirect their staked ETH, fortifying the security infrastructure of various protocols while imposing additional slashing conditions aimed at deterring malicious behavior. This strategic approach plays a pivotal role in establishing a robust security paradigm for Ethereum-based applications, substantially elevating the network's resilience and dependability. EigenLayer's distinctive model not only enhances security but also fosters a collaborative environment, where the collective strength of staked ETH contributes to fortifying the overall integrity of the Ethereum ecosystem.

 

Source: Dune Analytics

 

EtherFi

EtherFi (eETH) represents a decentralized Ethereum staking protocol that has undergone significant evolution since its inception. Initially tailored to foster a scalable network of solo stakers, EtherFi harnessed Distributed Validator Technology (DVT) to facilitate this objective. This technology fragmented validator keys, enabling a more extensive spectrum of users to stake without needing the conventional 32 ETH threshold. Moreover, this approach mitigated the concentration of slashing risks, dispersing it away from a singular hardware operator, thereby enhancing decentralization.

In a recent evolution, EtherFi has broadened its scope into the staking and liquid restaking sectors with the introduction of their eETH LST/LRT hybrid. Here, participants can mint eETH by staking ETH, yielding not only native ETH staking rewards but also facilitating native restaking on Eigenlayer. This unique setup empowers holders to garner dual staking rewards compared to vanilla staking, setting it apart from stETH (Lido). Notably, it eliminates the necessity for an additional restaking action on Eigenlayer, streamlining the process for users. Additionally, users gain the flexibility to leverage their eETH within DeFi to accrue supplementary yields if desired.

The architecture of EtherFi's mechanism revolves around ETH validators directing their withdrawal addresses towards Eigenpods, enabling users to accumulate Eigen points, which are anticipated to translate into protocol rewards in the future.

KelpDAO

KelpDAO is a prominent entity in the domain of liquid restaking, notably recognized for issuing Liquid Re-Staking Tokens (LRTs) like rsETH. It facilitates the conversion of staked assets into LRTs, allowing for more flexible and liquid representations of staking positions.

RsETH, an LRT offered by KelpDAO, grants restakers the ability to navigate the DeFi landscape while maintaining exposure to their staked assets. Restakers stake their Liquid Staking Tokens (LSTs) with KelpDAO to generate rsETH tokens, providing partial ownership of a pool of underlying restaked assets. RsETH holders can then utilize these tokens within DeFi protocols or opt for immediate liquidity by trading them on automated market makers (AMMs).

Source: shoalresearch.xyz

 

Closing

Restaking, catalyzed by innovative protocols like EigenLayer and facilitated by entities such as KelpDAO, symbolizes a pivotal shift in the staking landscape. Its capacity to consolidate security, enable versatile asset utilization, and enhance engagement in DeFi signifies the evolution and potential of blockchain-based financial ecosystems. As the crypto space continues to evolve, restaking remains a driving force of innovation, ushering in a more interconnected and secure blockchain future.

 

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