Re-staking and Liquidity Re-staking Ecosystem Overview

Introduction

Re-staking and liquidity re-staking have recently garnered widespread attention, especially against the backdrop of a potentially favorable ETH ETF. According to statistical data, the total locked value of these two categories has grown rapidly, ranking fifth and sixth respectively. Before delving into the additional advantages of re-staking and liquidity re-staking, let's first briefly review their basic principles.

Staking and Liquidity Staking Background

Ethereum staking refers to the act of putting ETH to secure the network and earn rewards. However, staking ETH carries the risk of being penalized, as well as the issue of insufficient liquidity due to the unbonding period.

To become a validator, individuals need to stake 32 ETH, which is a threshold that many find difficult to meet. As a result, pooled staking services have emerged, allowing multiple users to stake together.

Although these services allow users to stake any amount of ETH, the staked ETH cannot be used immediately. To solve this problem, liquidity staking has emerged. It mints a liquidity token to represent the user's staked ETH, and these tokens can be used for DeFi activities to increase yields.

The Rise of Re-staking

Re-staking is an emerging concept that uses staked ETH to secure certain modules that cannot be directly deployed or verified on Ethereum, such as sidechains, oracle networks, etc. These modules typically require active verification services (AVS), and re-staking allows them to leverage the security provided by Ethereum's large validator set.

Overview of the Re-staking Agreement

The main re-staking protocols currently include EigenLayer, Karak, and Symbiotic. They have some differences in terms of supported assets, security models, execution layers, etc:

• EigenLayer only supports ETH and its derivatives, with high security.
• Karak and Symbiotic support more assets, with more flexible security.
• The core contracts of EigenLayer and Karak are upgradable, while Symbiotic is essentially immutable.
• Karak supports multi-chain deposits and has also launched the K2 testnet.

These protocols may eventually provide similar services, and their success will depend on the partnerships that can be established. Currently, there are several well-known AVS on EigenLayer, and Karak and Symbiotic are also actively seeking cooperation.

Liquidity Re-staking Overview

The liquidity re-staking protocol has its own characteristics in terms of token types, supported assets, and DeFi integration.

• EtherFi, Puffer, and others offer native LRT, only accepting ETH deposits.
• Renzo, Kelp and others offer LRT based on token baskets, accepting multiple assets.
• EtherFi, Renzo and others are leading in DeFi integration and L2 support.
• Most protocols have integrated with EigenLayer and Karak, while some are collaborating with Symbiotic.

Growth of Re-staking

Recent re-staking deposits have surged, with the proportion of liquidity re-staking exceeding 70%. However, there has been some recent outflow of funds, possibly due to airdrop expectations and token distribution events. In the future, users may flow between different protocols, continuing to seek yield and airdrop opportunities.

Conclusion

Currently, approximately 13.4 million ETH have been staked through liquidity staking platforms, accounting for 40.5% of all staked ETH. The ratio of re-staking to liquidity staking is about 35.6%. With the introduction of new services and rewards, the re-staking ecosystem is expected to attract more capital inflow, but it may also face some short-term fluctuations.