Future Applications Of Re-Staking

For emerging networks, managing tasks such as bootstrapping a set of operators and ensuring security is a hassle.

Restaking is another interesting concept that came with the advent of the Proof-of-Stake (PoS) consensus mechanism.

PoS involves the staking of native ETH for participation in the consensus. Restaking takes it one step further. In restaking, LSTs are provided for the staked native ETH🪙, holding the same value and representing your staked assets.

The upsides, the downsides, the riptides. All of these have been discussed multiple times, but what about the future aspects?

The Good Future Aspects 🔮

My ex didn’t see a future with me, but I believe there is some future with Restaking though!

The current TVL (Total Value Locked) of EigenLayer stands at around $15 billion and is growing every day. The fact of the matter is that everyone wants higher yields on their stake, which also leads to a better ecosystem. Let’s discuss this in a bit more detail:

1. Easier Way of Security

   • Numerous new projects & networks come into existence with every passing day, and it is extremely difficult to establish a Validator Set for each of them as the process is costly.

   • Restaking solves this problem with the feature of Pooled Security as it leverages Ethereum’s Validator set.

2. Interoperability and Cross-Chain Staking

   • With restaking, users can participate in multiple protocols of their interest without losing liquidity. This is enabled by LSTs and LRTs.

3. Diversification & Maximized Returns

   • The continuous evolutions in the blockchain space are leading to more and more interchain operations.

   • With restaking providers like EigenLayer, it is much more convenient to invest across multiple chains, unlocking diversification opportunities and maximizing returns.

4. Decentralized Identity Solutions

   • In order to enhance security across staking protocols, decentralized identity solutions could be used.

   • By leveraging decentralized identity mechanisms, participants can safeguard their assets and mitigate risks associated with malicious actors or fraudulent activities in the staking landscape.

Future Market Conditions

While it is extremely difficult to predict London’s weather☁️, it is not so difficult to predict the market conditions.

The market revolves around one single motivation i.e. profit. Those who possess an upper-hand (leverage) will be benefited here. A few points discussing the same have been mentioned below:

Restaking Protocols at leverage

• The Restaking Protocols hold swords in each hand. On the one hand, they have the supply side i.e. the stakers, while on the other one they have the demand side i.e. the AVSs.

• Because of this unfair advantage, Restaking Protocols can manipulate their rake, or even the underlying marketplace.

AVS & Restakers at leverage

• Suppose you are an AVS or a Restaker, and you hold more than 50% of the marketplace. Wouldn't you want it to work according to your preferences, either at lower operational costs or with higher rewards?

The Favorite Child

• The fight amongst AVSs will continue to be at the top of the marketplace.

• At a later stage, it might even involve airdrops, donation of native protocol tokens or ETH, etc.

The SaaS Aspect

• For emerging networks, managing tasks such as bootstrapping a set of operators and ensuring security is a hassle.

• Restaking marketplaces like EigenLayer aim to create microservices for new networks, just as AWS did for developers.