The Leading 5 Liquid Restaking Protocols Built Upon EigenLayer

Led by EigenLayer, the concept of liquid restaking is gaining traction as a significant trend in the DeFi landscape for 2025. By redeploying locked tokens through third-party infrastructure protocols that operate on the main Ethereum network, ETH holders can enhance the efficiency of their capital while retaining the ability to access liquidity and simultaneously contributing to the overall growth and decentralization of the Ethereum ecosystem.

In this article, we’ll delve into the transformative impact EigenLayer has had for cryptocurrency investors and highlight some of the leading strategy managers that have emerged from its base.

Let’s dive in!

Understanding Staking and Liquid Restaking

To grasp this concept thoroughly, it's essential to first understand the principles of both traditional staking and its liquid counterpart. Let's start with the basics.

Traditional staking

In simple terms, this mechanism involves depositing a certain quantity of tokens into the smart contract on the Beacon Chain. These tokens serve as a security deposit, allowing holders of $ETH to participate in the Proof of Stake (PoS) consensus of Ethereum and help secure the network by validating blocks. For their significant role in maintaining the network, stakers earn rewards for each block they validate.

However, traditional staking presents a steep entry barrier for average users. Not only must one maintain a validator, but there is also a considerable minimum threshold to meet (for instance, 32 ether in the Ethereum network).

Liquid staking

Protocols like Lido , Rocket Pool , Stader , among others, address this barrier by offering liquid staking services, enabling anyone to engage in PoS consensus without the need to manage a validator node or meet stringent entry requirements. These platforms provide Liquid Staking Tokens (LSTs) as a form of 'receipt' for their staked assets, which can then be utilized in various DeFi farming strategies.

Restaking

Beyond merely contributing to the security of the main network (similar to staking with Ethereum validators), users can use their staked assets to provide security to third-party protocols, generating an additional income stream from this added security, thus improving the overall efficiency of their investments.

Liquid restaking

Moreover, some protocols have taken this concept even further, offering Liquid Restaking Tokens (LRTs) that enable users to keep all the earnings from staking while enjoying the flexibility and liquidity of their assets, amplifying the yield potential.

Liquid Restaking on EigenLayer

An innovative protocol on Ethereum , EigenLayer has pioneered an innovative crypto infrastructure known as restaking and LRTs. This middleware enables a direct connection between stakers and infrastructure developers, allowing the latter to utilize Ethereum's security layer without needing to maintain independent validators.

This is accomplished through providing a variety of Actively Validated Services (AVSs), which include any infrastructure services looking to incorporate Ethereum's robust security. Examples of such services include cross-chain bridges, rollups, and oracle and keeper networks.

$ETH and LSTETH Holders can bring their assets to EigenLayer, contributing to both Ethereum's consensus mechanism and the security of third-party protocols. However, this introduces additional slashing risks, and elevated risk often warrants enhanced returns. As a result, restakers enjoy extra yield from the fees associated with the AVSs they safeguard.

As a motivating factor, participants are rewarded points for their engagement in the ecosystem. The excitement surrounding the potential EigenLayer Airdrop, based on accumulated influencer points, has triggered a 'Points-farming season,' resulting in a rapid increase in Total Value Locked (TVL) as users strive for bonus yields on their staked ETH from the airdrop.

The value proposition is straightforward – restake ETH to earn improved yields and accumulate bonus loyalty points while preserving your asset liquidity.

It began accepting deposits in mid-2023, and as of mid-May 2024, it has secured nearly $15 billion to allocate to its Operators and AVSs .

Source: DefiLlama

To elevate yields, you can assign your staked ETH to Operators which then supplies it to different AVSs or directly register and allocate to the AVSs themselves, effectively becoming Operators.

How Can You Generate Earnings on EigenLayer Via Liquid Restaking Protocols?

The intricate management of positions between Operators has birthed a new category of DeFi protocols – liquid restaking strategy managers. These frameworks simplify the intricacies involved in manual operations, facilitating seamless collaboration between LST holders and AVS node operators, yielding additional profits, EigenLayer points, and their own loyalty rewards. 

Let’s delve deeper into some of these platforms and provide an initial glimpse into promising future investment avenues. Here’s a roundup of the leading protocols based on Total Value Locked (TVL).

EtherFi

Originally a protocol for liquid staking , it has aligned with EigenLayer and stands as the most significant player in the ecosystem by TVL metrics. You simply deposit your $ETH into EtherFi; the yields can be automatically restaked and enhanced. By doing this, you unlock all the underlying rewards from staking as well as freshly generated $eETH. This LST can then be restaked natively for additional rewards, traded, or leveraged for yield generation within the DeFi realm.

Source: Dune.com/EtherFi

EtherFi provides a 3% ARP, has captured almost 1.2b EigenLayer points, and distributed over 800b of its own loyalty points.

Renzo

Backed by Binance , this protocol is a cross-chain EigenLayer strategy manager is designed to offer the best risk/reward strategies. It demystifies the complexities of restaking and presents opportunities for higher returns compared to traditional staking.

Renzo accepts deposits in $ETH or its LSTs like $wBETH or $stETH and issues the $ezETH LRT representing initial holdings. Renzo produces a 3.2% APR as well as bonus incentives in the form of points.

Since its inception in late 2023, Renzo has amassed nearly $3 billion in TVL from around 54,500 unique depositors, distributing 1.34 billion EigenLayer points and 2.91 billion ezPoints to its users.

Source: Dune.com/renzoprotocol

Puffer

Initially introduced as a PoS validation platform, it has evolved into a significant contender within this space, largely thanks to its native restaking option fueled by EigenLayer. Supported by a $120,000 Ethereum Foundation Grant, it offers a secure earnings model through a unique algorithm designed to prevent slashing. Puffer aims to provide enhanced yields from $ETH, $stETH, and $wstETH. Users receive Puffer’s native LRT (nLRT) – $pufETH, which symbolizes accumulated staking/restaking rewards.

Since its launch on February 1, 2024, Puffer has already gathered a TVL of approximately $1.35 billion from around 76,000 unique users by providing stable and enhanced APRs.

Source: Puffer

Kelp DAO

Created by the founders of Stader Labs , it is a multi-chain platform and one of the initial adopters of the LRT framework. Through $rsETH, its LRT, users can continue to engage with DeFi applications while accruing their staking/restaking rewards. Kelp DAO has eliminated all fees related to LST deposits, accommodating $ETH and a diverse array of LSTs such as $ETHx, $stETH, and $sfrxETH (with more to follow) to play a role in securing various web3 infrastructures while generating yield incentive bonuses.

At the time of writing, Kelp DAO has over 265k ether from 29k addresses, amounting to approx. $750k in TVL.

Source: Dune.com/maybeYonas

EigenPie  

Magpie, a leading DeFi yield aggregator , has established a SubDAO with a novel approach to overseeing EigenLayer. They have formed an integration with Chainlink CCIP to facilitate isolated liquid restaking across a broad spectrum of LSTs. 

When you deposit into EigenPie, specific LRTs are minted based on a single LST rather than a collection of them, which is intended to mitigate the risks associated with any singular LST.

With nearly 10,000 unique participants and a TVL exceeding $770 million, it offers a seamless route for users to receive accumulated stake/restaked rewards.

EigenLayer’s Impact in Transforming the Ethereum Ecosystem

With its revolutionary restaking concept, EigenLayer enables Ethereum (ETH) holders to derive additional benefits from their holdings while assisting in securing various projects. It allows ETH holders to earn yield and future airdrops (points) from numerous projects simultaneously.

In conclusion, restaking has transformed the investment landscape, creating a compelling combination of yields, flexibility, and security for diverse infrastructure applications. The introduction of LRTs provides investors with the chance to repurpose their staked assets for additional returns. With ETH and LSTETH holders now possessing the ability to provide security across multiple protocols concurrently, an invigorating ecosystem around EigenLayer is taking shape, pivotal for both the growth and decentralization of Ethereum.