EigenLayer: restaking and what it costs
Lesson 31 of 58 in the course “Crypto”. Free, with animations and a quiz.
The same ETH works twice
Staked ETH secures Ethereum. EigenLayer’s idea: let that same deposit secure other services too. They are called AVSs: price oracles, bridges, data stores such as EigenDA. You put ETH, or stETH and rETH, into EigenLayer, choose an operator, and the operator plugs into several AVSs. In return you earn extra rewards on top of regular staking. In 2025 the project rebranded as EigenCloud, but the restaking protocol is still called EigenLayer.
More yield, more ways to lose
Since 17 April 2025, slashing is live on EigenLayer: if an operator breaks the rules of some AVS, part of your deposit can be cut. That comes on top of the risks of Ethereum itself and the staking protocol. Many people do not go in directly but through LRTs, liquid restaking tokens such as ether.fi’s weETH, Renzo’s ezETH or Kelp’s rsETH. That is one more layer: its own smart contract and its own market price, which can drift away from ETH.
What it looks like in real life: ezETH
On 24 April 2024, Renzo’s ezETH token, which should trade close to ETH, crashed for minutes on DEXs to $700 while ETH was around $3,200. The cause: people dumped it after the airdrop, and Renzo had no proper withdrawals yet. The hardest hit were those who had borrowed against ezETH with leverage: about $56M of positions were liquidated across DeFi. The price came back, but liquidations cannot be undone.
A checklist before restaking
Remember that leaving EigenLayer takes 14 days: you cannot run fast in a panic. If you use an LRT, check that it has working withdrawals and enough liquidity on DEXs. Compare the yield: the bump over the usual ~2.5% is often small, and much of the “yield” used to be promised points. Start with a small share of your ETH. And never borrow against an LRT with high leverage: the ezETH story shows how that ends.
Check yourself
- What does restaking give you, and what does it add?
Correct answer: Extra rewards and extra slashing risk. The same deposit also secures AVSs: that pays, but since April 2025 it can also be cut. And withdrawals take 14 days. - Why were ezETH holders with loans hit in April 2024?
Correct answer: The token dropped for minutes and liquidations fired. ezETH’s DEX price briefly fell far below ETH. A few minutes were enough for collateralized loans to get liquidated.
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