Ethereum Restaking - The next big thing after liquid staking?

• Ethereum Restaking is becoming a hot topic owing to the benefits it could serve to validators and different chains’ security.
• Popular crypto influencer, Vance Spencer, stated that restaking will become a hot ball of money with the emergence of 10-100 protocols.
• While Restaking might find some interest early on, it still won’t gain enough traction to replace Liquid Staking, which commands $21 billion.

Ethereum introduced unstaking this year, and the crypto market witnessed a stark shift. The Decentralized Finance (DeFi) space, in particular, observed the emergence of liquid staking protocols. With the discourse of “restaking” picking up heat, it seems like the market is getting ready for the next big thing.

Ethereum Restaking - To watch out for

Ethereum Restaking is a novel concept that suggests that validators that have deposited ETH onto the Ethereum network can use that same ETH to extend their services. Validators operate as the gatekeepers, maintaining the security of the network. This operation can be extended to other chains as well.

Introduced by EigenLayer, restaking can be achieved through the EigenLayer protocol, which states that the service makes,

“It easier for anybody to be able to spin up and build their projects, where historically it was extremely difficult to bootstrap your own trust network.

Put simply, stakers opt-in by granting the EigenLayer smart contracts the ability to impose additional slashing conditions on their staked ETH, allowing an extension of cryptoeconomic security. 

Now, while the concept is still taking shape, people seem to already be showing their interest in it. Popular crypto influencer Vance Spencer even took to X, formerly Twitter, to say,

“It is now clear that there are going to be 10-100 restaking protocols, and that the restaking game will increasingly become a hot ball of money.

He added that the people who will benefit the most from Ethereum Restaking would be the dominant ETH L1 staking protocols as people would get more comfortable using it.

Taking over the DeFi market

The arrival of Restaking protocols, even at their peak, would still need a lot of hype and interest from users to enable the novel concept to take over the market. At the moment, the competition for Restaking is the entire DeFi market, as the competition here is quite tough.

For most of its history, the space has been dominated mainly by decentralized exchanges (DEXes). This changed with the rise in demand for liquid staking protocols, which made history after surpassing DEXes to become the biggest protocol category, with over $21 billion locked on the protocols.

DeFi market TVL

Thus, if Ethereum Restaking protocols ever enter the DeFi market, they would witness an extraordinary amount of resistance, which, if pushed past, could set them up to become a big deal in the future.

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