Liquid Restaking Explained
Liquid restaking combines Ethereum staking with EigenLayer restaking to earn multiple yield streams while maintaining liquidity. This guide explains how LRTs work and how to participate.
What Is Liquid Restaking?
Liquid restaking provides:
- ETH Staking Rewards (~4% APY)
- EigenLayer AVS Rewards (variable)
- Liquid Token (use in DeFi)
Instead of directly restaking on EigenLayer (which locks assets), liquid restaking protocols issue tradeable tokens representing your restaked position.
How It Works
The Flow
- Deposit ETH to LRT protocol
- Protocol stakes and restakes to EigenLayer
- Receive liquid token (weETH, ezETH, etc.)
- Use token in DeFi or hold for yield
Yield Stack
- Base staking: ~4% from Ethereum validation
- AVS rewards: Variable from securing services
- Points/airdrops: Potential bonus rewards
- Total: 6-15%+ effective yield
Understanding EigenLayer
What Is EigenLayer?
EigenLayer enables "restaking". Reusing staked ETH to secure additional protocols called AVSs (Actively Validated Services).
What Are AVSs?
Services that use restaked capital for security:
- Oracle networks
- Data availability layers
- Cross-chain bridges
- Rollup sequencers
AVSs pay for security, creating additional yield for restakers.
Leading LRT Protocols
EtherFi (weETH)
- Market Leader: $4B+ TVL
- Token: weETH (wrapped eETH)
- Approach: Native ETH, DVT focus
- Best For: Largest, most integrated
Renzo (ezETH)
- Multi-Chain: Native L2 deployments
- Token: ezETH
- Approach: Yield optimization
- Best For: L2 users, yield seekers
Kelp DAO (rsETH)
- Multi-LST: Accepts stETH, ETHx
- Token: rsETH
- Approach: Flexible collateral
- Best For: Existing LST holders
Puffer (pufETH)
- Technology: Secure-Signer anti-slashing
- Token: pufETH
- Approach: Native restaking
- Best For: Tech-focused users
LRT Comparison
| Token | TVL | Model | DeFi Support |
|---|---|---|---|
| . . . - | . . - | . . . - | . . . . . . . |
| weETH | $4B+ | Native ETH | Best |
| ezETH | $2B+ | Native ETH | Strong |
| rsETH | $1.5B+ | Multi-LST | Good |
| pufETH | $1B+ | Native ETH | Growing |
Using LRTs in DeFi
Collateral
- Aave: weETH, ezETH accepted
- Morpho: Various LRTs
- Pendle: Yield trading
Liquidity
- DEX pools for trading
- Curve/Balancer integration
- Good exit liquidity
Risks
Slashing Risk
- AVS misbehavior can cause slashing
- Multiple protocols = multiple risks
- LRTs choose AVS strategies
Smart Contract Risk
- Complex systems with many components
- EigenLayer + LRT + AVS contracts
- Well-audited but novel
Operator Risk
- Depends on operator quality
- LRTs vet and select operators
- Check operator metrics
Getting Started
- Choose LRT: weETH safest, others for features
- Deposit ETH: Through LRT protocol interface
- Receive tokens: Automatic after deposit
- Hold or use: Earn yield or deploy in DeFi
Compare LRT yields and find opportunities on Fensory.