What is rsETH?
rsETH is a Liquid Restaked Token (LRT) issued by Kelp DAO. Unlike some liquid restaking protocols that only accept native ETH, Kelp DAO accepts deposits of existing liquid staking tokens (LSTs) such as stETH and rETH, converting them into rsETH while restaking the underlying value on EigenLayer.
How Kelp DAO Works
Kelp DAO operates as an aggregator for liquid restaking. Users can deposit:
- Native ETH
- Liquid staking tokens (stETH, rETH, and others)
The protocol then restakes these assets across multiple Actively Validated Services (AVS) on EigenLayer. This aggregation approach aims to optimize the restaking allocation across different AVS options.
rsETH is a non-rebasing token, meaning your token balance remains constant while the exchange rate between rsETH and ETH increases as staking and restaking rewards accumulate.
Reward Sources
rsETH holders receive rewards from:
- Base Ethereum staking yields (from the underlying LSTs or staked ETH)
- EigenLayer AVS rewards when they become active
- Protocol incentive programs
Multi-LST Approach
By accepting multiple LSTs, Kelp DAO provides diversification across different liquid staking protocols. Users who already hold stETH or rETH can restake these assets without first converting back to ETH.
Risks and Considerations
Layered Smart Contract Risk: rsETH involves multiple contract layers: the underlying LST contracts, Kelp DAO's LRT contracts, and EigenLayer's restaking contracts. Vulnerabilities in any layer could result in losses. Slashing Risk: Restaked assets face slashing conditions from Ethereum consensus validators and from any AVS the protocol delegates to. Multiple slashing vectors increase overall risk exposure. AVS Selection Risk: Kelp DAO selects which AVS protocols to restake with. Poor selection or delegation to vulnerable AVS could result in slashing or reduced returns. LST Dependency: rsETH's value depends on the underlying LSTs functioning correctly. Issues with stETH, rETH, or other accepted LSTs would affect rsETH. Liquidity Risk: Large redemptions may face delays or slippage. The path from rsETH back to ETH involves multiple steps through the restaking and staking layers. Protocol Risk: As with any DeFi protocol, governance decisions, upgrades, or operational issues could affect rsETH holders.Liquid restaking through protocols like Kelp DAO adds complexity compared to simple liquid staking. Users should understand the multi-layered architecture and associated risks before depositing funds.