Restaking After the FOMO: What’s Left Today

A year ago, Restaking was hailed as Ethereum’s new paradigm; today, is it still worth the hype?

In 2022, EigenLayer raised $14.5M; in 2023, it followed up with another $50M; a year later, that number ballooned to $100M.

In a cycle where fundraising overall was sharply contracting, EigenLayer’s ability to repeatedly close nine-figure rounds stood out.

That capital enthusiasm quickly spilled over on-chain. With the goal of “restaking Ethereum’s security,” EigenLayer pushed its TVL from 0 to $20B in just a year, making Restaking one of the hottest narratives in DeFi. FOMO swept the market: both institutions and retail rushed to deposit ETH and LSTs, convinced that betting on Restaking meant securing a ticket to the next growth cycle.

But a year later, the cracks are showing: capital has indeed piled in, yet additional yield remains scarce; the AVS ecosystem, despite all the hype, has yet to deliver a killer application. The noise has faded, and the term “Restaking” itself is slipping out of daily conversations. As Ethereum rallies once again, it’s worth pausing to look back: what has Restaking actually left us?

Rethinking the Business Model of Restaking

Restaking, introduced by EigenLayer, is at its core an aggressive attempt to push capital efficiency to the limit.

After Ethereum transitioned to Proof-of-Stake, the network’s security became entirely reliant on staked capital — the amount of ETH locked by validators. Through economic incentives and slashing mechanisms, validators are compelled to act honestly, earning staking rewards in return, thereby ensuring the network’s security.

In crypto, the pursuit of higher capital efficiency never goes out of fashion. Builders are obsessed with squeezing more productivity out of idle assets. So when faced with a trillion-dollar “base layer” of staked ETH, it was only a matter of time before someone tried to “do more with it.” If liquid staking unlocked the first wave of efficiency, Restaking is the next experiment — this time by extending Ethereum’s economic security outward.

The idea is simple: billions of dollars in staked ETH secure Ethereum, but they don’t directly secure anything else. Meanwhile, new infrastructure and services also require robust economic security. Restaking steps in as the “middleman,” bridging the two sides.

Take EigenLayer as an example. For users looking to boost returns on their ETH or LST, EigenLayer acts as a broker, offering them “side gigs.” By opting in, their assets are restaked through the protocol and redirected to secure other blockchain services, known as Actively Validated Services (AVS). AVSs are infrastructure modules that need external validation and security — such as oracles, rollup sequencers, or data availability layers. These AVSs, in turn, pay service fees for the security guarantees, which form the fundamental revenue source for Restaking.

This is the core value proposition of Restaking: it allows ETH already staked on Ethereum to be restaked through EigenLayer, with EigenLayer allocating that security to protect additional AVSs.

Does the narrative still hold after all this time?

In Restaking’s early days, yields were propped up by the dual expectations of protocol token airdrops — both from Restaking platforms themselves and from Liquid Restaking protocols. Coupled with liquidity incentives from LRT protocols and Pendle integrations, this attracted massive inflows of capital.

But once the tokens were issued and the “mining bonus” faded, is Restaking yield really as compelling as the story once promised?

From a capital perspective, DeFiLlama data shows that after EigenLayer’s TVL hit new highs around June last year, growth largely stalled. Over the following year, fresh inflows dried up — almost as if the engine had shut off. And yet, surprisingly, the overall Restaking TVL today still exceeds that of the entire DEX sector. This sounds counterintuitive: in our mental model, trading-related DEXs should naturally capture far more liquidity than an infrastructure play like Restaking.

From a yield perspective, the hesitation of capital becomes even more obvious. Among the top three LRT protocols by TVL — EtherFi, Kelp, and Renzo — the incremental returns from Restaking are minimal. As the screenshot below shows, compared to plain native staking, Restaking offers only a marginal yield premium, while at the same time introducing additional layers of risk. Viewed through this lens, the risk-reward profile alone is enough to turn many investors away.

Weren’t we supposed to be talking about economic security? Where did the demand go?

As mentioned earlier, yields ultimately come from end-users. The number and strength of those customers determine the level of return — which makes it clear the bottleneck lies on the demand side. Today, on EigenLayer’s AVS dashboard, you’ll find that actual rewards are absent. The reason is simple: most AVSs either have no real revenue yet, or haven’t launched tokens, meaning there is no sustainable profit stream flowing back to EigenLayer.

This leaves participants in an awkward position. On one hand, valuations for AVS projects remain speculative, heavily influenced by ecosystem hype, with the value of their future tokens still unknown. On the other, reward mechanisms are far from standardized — even leading AVSs have yet to clarify token allocation or revenue-sharing structures. For many, joining EigenLayer feels like “blind mining.” And when the front-end bluntly shows “No rewards available”, how many investors will still choose to commit?

Even LRT protocols themselves are starting to feel the drag. EtherFi, currently the largest by TVL, has recently ventured into offering crypto-backed credit card services — a sign that it’s not just end-users who are anxious about growth.

End

Restaking’s current situation may look awkward, but it would be premature to dismiss its future. The capital is still there, builders are still shipping, and Ethereum’s “world computer” narrative is once again gaining traction. While we haven’t yet seen the comfort of steady cash flows, Restaking remains an option in the future of the economic security market. Whether that option pays off will depend on the next stage: can real applications and real demand finally emerge to support the story?

Disclaimer: This content is for educational purposes only and does not constitute financial advice. DeFi protocols carry significant market and technical risks. Token prices and yields are highly volatile, and participating in DeFi may result in the loss of all invested capital. Always do your own research, understand the legal requirements in your jurisdiction, and evaluate risks carefully before getting involved.