EigenLayer-era restaking moved from thesis to deployed capital with extraordinary speed. We revisit what we got right, what we got wrong, and where we stand.
In our March 2025 note we framed restaking as a high-conviction but contained position. Eleven months later, our framing has cracked along the contained dimension.
Restaking allows already-staked ETH (or its liquid representations) to be reused as economic security for additional protocols — known as Actively Validated Services, or AVSs. The premise is straightforward: a single unit of capital secures multiple systems, accruing yield from each. The premise also turned out to be more dangerous in practice than in theory.
The yield arbitrage was real. Average AVS-derived yield on restaked ETH peaked at 7.4% in late summer 2025, against a baseline staking yield of 3.2%. Clients who adopted restaking before September 2025 captured meaningful incremental return.
Slashing conditions across AVSs do not commute. A validator participating in three AVSs is exposed to the worst of all three, not to an average. As AVS operators have grown more aggressive in their offerings, the aggregate slashing surface has expanded faster than the aggregate yield. By Q4 2025 the marginal AVS was paying less than 30 basis points for a non-negligible incremental risk.
We have reduced restaking exposure in standard mandates from a maximum 18% of staked ETH to a maximum 6%. We continue to allow targeted restaking with named, audited AVSs operated by validator partners with multi-year track records — Renzo and ether.fi qualify; most others do not.
Restaking is not dead. It is, however, a position that requires the kind of operational diligence that most retail liquid restaking products do not perform. We caution clients against generalist LRTs and recommend instead direct participation in specific AVSs, sized within an allocation envelope that respects the structural risk.
We expect the next twelve months to see a bifurcation. A small number of AVSs will mature into infrastructure with predictable risk profiles. The remainder will continue to compete on yield headlines, accumulating risk that becomes visible only in stress.