Key facts: Re-staking allows you to increase profits, compared to «traditional» staking. Vitalik Buterin calls for caution with re-staking protocols. Liquid re-staking is a trend that is growing in cryptocurrencies, more precisely in those that use the consensus algorithm known as proof of stake (PoS). Of them, the most popular is ether (ETH), the native currency of the Ethereum network. Basically, re-staking consists of giving additional utility to the tokens delivered by liquid staking platforms as proof of deposit of ETH (or other cryptocurrencies). That other utility could be, for example, putting those tokens as collateral on a decentralized lending platform and using the money obtained to re-stake Ethereum or other networks. Thus, the return on the initial investment is increased. The magnitude of this market niche is evident with a new milestone achieved: The total value deposited on re-staking platforms exceeded $8 billion.
The following graph, provided by the on-chain data analysis platform, TheBlock, shows the growth in money (measured in dollars) locked in the smart contracts of these re-staking protocols:
Money deposited in re-staking platforms. Source: TheBlock. The featured protocols are, in decreasing order of value locked: Etherfi ($3.2 billion), Renzo ($2 billion), Puffer ($1.3 billion), and Kelp ($740 million). Several of these protocols use the functionalities of the EigenLayer platform (exclusive for those who operate Ethereum validator nodes) to provide their liquid re-staking services. As BitcoinDynamic mentioned at the beginning of March, the possibility that at some point EigenLayer decides to reward users with a token through an airdrop, stimulates the growth of this market niche.
Re-staking will lead the “DeFi renaissance,” according to Coinbase
Coinbase, the second largest bitcoin (BTC) and cryptocurrency exchange in the world, maintains that the “DeFi renaissance” will be focused on re-staking protocols. The company highlights the notable role that the aforementioned EigenLayer protocol is playing. However, Not everyone is so optimistic and there are voices that invite us to be cautious. Vitalik Buterin, co-creator of Ethereum, has warned of the possibility of systemic risks with re-staking. This could occur, for example, if any of the synthetic tokens involved in the process lost parity with its underlying asset. Or also, if there was a hack that harmed a staking platform. For now, it is a nascent industry that is continually growing.