Restaking After Incentives: A Long Term Sustainability Test

Restaking Sustainable Long Term is the real test as restaking shifts from a yield narrative to security infrastructure. Reusing the same stake across multiple services boosts capital efficiency, but it also concentrates risk, increases operational complexity, and raises a harder question: when incentives fade, will real fees and demand be enough to sustain it?

What is restaking, and what problem does it solve?

The Restaking Mechanism

Restaking allows validators to reuse already staked cryptocurrency to secure multiple blockchain protocols simultaneously, rather than locking assets to a single network. Before restaking, validators were limited in how much value they could capture from staked assets, since those tokens were illiquid and confined to securing only the base blockchain. Through platforms like EigenLayer, Ethereum validators can extend their staked ETH to support additional services called Actively Validated Services (AVSs), including oracles, bridges, data availability layers, and sidechains.

Solving the Bootstrapping Problem

Restaking addresses the challenge of bootstrapping cryptoeconomic security for new protocols, which traditionally had to attract capital that competes with alternatives like government bonds or Ethereum staking itself. EigenLayer helps by aggregating a ready to deploy network of operators and restaked assets, allowing new Web3 services to buy security on the open market rather than generating and maintaining it internally. This shared security layer reduces fragmented security, where applications rely on multiple middleware services that each maintain separate security systems, compounding vulnerabilities across the stack.

Why did restaking grow so fast in the incentive era?

The Airdrop Speculation Engine

EigenLayer’s TVL surged from around $1 billion in January 2024 to roughly $15 billion by early May 2024, making it one of the largest DeFi projects, driven primarily by users anticipating an airdrop. Points accumulated based on both the amount and duration of ETH and liquid staking tokens deposited, and were widely speculated to be linked to future token allocations. The points system rewarded users based on stake size and time in protocol, which encouraged months of active farming. EigenLayer expanded from around $1.1 billion to over $18 billion in TVL throughout 2024 and 2025, representing the majority of the restaking market.

Layered Yield Opportunities

Restakers captured layered benefits by continuing to earn base staking returns while also earning additional rewards tied to AVSs, creating a double layered yield mechanism that boosted earning potential. Points based airdrops became the dominant meta in 2024, rewarding users based on liquidity or volume rather than simple transaction counts. Multiple liquid restaking protocols offered outsized points rewards that could be stacked across platforms. For example, users could deposit ezETH on ZeroLend to farm three different reward streams at once: EigenLayer points, Renzo points (with a 2x boost), and ZERO tokens.

Is restaking yield sustainable, who pays for it?

The Three Layer Revenue Stack

AVSs compensate operators and restakers through a mix of fees paid in ETH, stablecoins, or AVS tokens, plus incentives such as emissions, points, airdrops, or longer term revenue sharing arrangements. The sustainability of this mix is the single most important determinant of whether restaking rewards are durable or simply short lived subsidies. Some analyses suggest that even if major rollup revenues were redirected to AVS services, restakers would receive around 4.3% annualized yield on roughly 3.535 million ETH restaked, and that figure would likely be lower after accounting for slashing risk. To break even at scale, AVSs may need to generate on the order of $200 million annually based on around $12.4 billion in restaked value, which can exceed what established DeFi protocols generated in fees during comparable periods.

From Token Emissions to Real Fees

Incentive payments in restaking can function like block rewards in Proof of Stake networks: subsidies meant to attract stakers during the bootstrap phase. A recent EigenLayer governance proposal introduces fee capture where 20% of AVS reward related fees, previously subsidized by EIGEN incentives, would be routed into buyback contracts. The marketplace for validator services can also create downward pressure on yields as protocols compete to attract capital, potentially pushing economics into a fragile equilibrium that reduces end user returns. Unless AVS revenues shift from token emissions to real fee paying customers, restaking yields may resemble early Ethereum inflation phases: high initially, but difficult to sustain long term without durable demand for the secured services.

What risks emerge when many AVSs share one security set?

The Single Point of Failure Problem

When a large share of capital is concentrated in a single restaking layer, it can create a systemic single point of failure and centralization risk that may threaten the broader ecosystem if exploited. Attackers may target the weakest AVS or integration to compromise shared security. Under Byzantine Fault Tolerance assumptions, a local failure can sometimes degrade global liveness or safety properties. If EigenLayer grows large enough, systemic risk within it could affect a meaningful portion of ETH security, increasing blast radius across the stack.

Slashing Cascades and Correlated Failures

Without strict isolation of stake across services, a slashing event in one AVS can affect the same collateral used to secure other AVSs, creating correlated losses. If operators secure dozens of AVSs, a single operational failure can trigger penalties across multiple services, potentially bankrupting operators and forcing asset sales, which can amplify stress across DeFi markets. Research from Symbiotic introduces the restaking ratio to quantify how stretched collateral becomes across networks, helping identify when risk levels become unacceptable.

How does restaking reshape validator ops and centralization?

Operational Complexity Explosion

Restaking increases operational and risk management complexity, making it essential that participants understand opt-in slashing conditions and failure modes. Like major staking platforms such as Lido, EigenLayer can also introduce centralization risks if stakers redirect large volumes of capital to chase higher yields. In current restaking designs, validators may lock withdrawal credentials, opt into additional slashing rules, and take on more operational responsibilities to earn incremental yield. Selecting AVSs, managing configurations, and maintaining reliable infrastructure increases the learning curve, while centralization pressure can grow if large operators dominate restaking pools.

Winner Take All Dynamics

Flexible opt-in models may support diversity by allowing smaller operators to participate, but large operators can still dominate due to professional infrastructure and economies of scale. As staking becomes commoditized, both stakers and providers seek additional revenue streams, and restaking commissions create incentives for operators to scale. Some researchers argue that liquid staking can trend toward a single dominant platform over time, which would centralize staked ETH. Second order effects include professional operators cutting corners to stay profitable when yields compress, and solo stakers facing long payback periods on hardware, which can accelerate consolidation among larger players.

Can restaking survive when incentives shrink?

The Product Market Fit Test

Restaking may still be pre product market fit, with a key milestone being when an AVS completes the full loop of real rewards and real slashing tied to real demand. A durable model likely requires multiple AVSs proving sustainable economics before imitation effects accelerate. Long term success depends on genuine utility, competitive risk adjusted yields, and robust risk management, rather than temporary airdrops and emissions. A December 2025 EigenLayer governance proposal introduces an Incentives Committee to redirect rewards toward productive stake that actively secures AVSs and generates real fees, with 20% of AVS reward related fees flowing into buyback contracts.

From Restaking to Verifiable Infrastructure

The early restaking narrative helped bootstrap attention and capital, but that phase is ending. The EigenCloud rebrand signals a shift from a restaking era toward building a modular framework for verifiable services. As stablecoin adoption expands and regulatory clarity improves, verifiable services may offer a more efficient path to scale applications without launching new chains. Restaking remains viable only if it solves real coordination problems beyond yield optimization. Its future depends on whether it becomes a default security layer for middleware or remains a transitional phase. Institutional relationships with Flow Traders and ConsenSys, along with infrastructure developments like EigenDA V2 and EigenCompute, are often cited as signals of this direction.

Conclusion

Restaking is entering its real stress test as incentives fade and economics are forced into the open. Its long-term viability will depend less on layered yield and more on whether AVSs can generate durable, fee-based demand for shared security. If restaking evolves into reliable infrastructure that delivers verifiable value, it can become a foundational layer of the ecosystem. If not, it risks remaining a transitional phase defined by subsidies rather than sustainability.