According to Cointelegraph, the recent surge in Ethereum restaking is attributed to several factors, including a decrease in annual percentage rates (APRs) of staking. Non-custodial staking service provider P2P.org highlights that staking, the process of locking crypto in a smart contract to generate income and rewards, is a crucial component of proof-of-stake (PoS) blockchains, providing network security. Staking often attracts investors due to higher APRs compared to traditional savings accounts.
As decentralized finance (DeFi) has evolved, the concept of restaking has emerged, allowing stakers to reuse their locked tokens to gain additional rewards. This process not only increases rewards but also enhances network security. On August 15, Ethereum's (ETH) token supply surpassed 120 million, a rise attributed to the surge in restaking. The ability to restake and earn more rewards has driven demand, further increasing ETH issuance.
P2P.org's head of staking, Artemiy Parshakov, notes that broader trends are fueling the restaking surge. Increased network participation has led to diluted individual rewards in staking, prompting anticipation of a decrease in ETH staking APR. This scenario makes restaking an attractive option for investors. Parshakov also points out that competition among staking service providers, custodians, and wallets to offer higher returns and unique technologies has further driven restaking adoption, making it a crucial strategy for optimizing returns in a competitive environment.
Additionally, Parshakov explains that restaking allows protocols to enhance security without incurring higher operational costs or developing their own mechanisms. P2P.org senior product manager Alessandro Maci adds that the surge in ETH-based restaking is also linked to key developments in the space. He cites the EigenLayer team's announcement, which enables the claiming of rewards on restaked assets using the EIGEN token, as a significant factor sparking increased participation and interest.
Maci also believes that the introduction of the permissionless restaking protocol Symbiotic has contributed to the restaking surge. He views the protocol as a viable alternative to EigenLayer, further driving interest and participation in Ethereum restaking.
