Restaking, LRTs, & LRTfi

Restaking

Restaking protocols, like EigenLayer and Symbiotic, are marketplaces for economic security. 'Restakers' supply crypto assets (eg. ETH, stablecoins, protocol tokens) as collateral that can be rented by Actively Validated Services (AVSs) in exchange for payment to restakers and operators.

Actively Validated Services (AVSs)

AVSs use restaking platforms to source operators that are economically incentivized to run their AVS logic off-chain in a decentralized manner; in exchange they pay rewards to restakers and operators in addition to the yield generated by the restakers deposit collateral. AVSs use EigenLayer to rent shared security to bootstrap the decentralization and integrity of their protocol.

We believe EigenLayer is becoming the de facto risk-adjusted yield source for ETH (and soon other tokens) staking. As permissionless innovation on EigenLayer scales, so does the real-yield paid to EigenLayer depositors by AVSs.

Liquid Restaking Tokens (LRTs)

Liquid restaking tokens (LRTs) are tokenized receipts of restaked assets, similar to how liquid staking tokens represent Ethereum staking positions. LRTs allow users to maintain liquidity while restaking, and are being adopted in DeFi as novel yield-bearing collateral. As ETH beacon chain staking rate continues to increase, the opportunity cost of not restaking rises, acting as a tailwind for LRT growth. Unlike traditional staking tokens, LRTs yield and security depend on the health and performance of the AVSs on EigenLayer or other restaking platforms; this means LRT providers must manage risk by curating a basket of AVSs to secure.