Author: Ingeun
Compiled by: TechFlow
Key Takeaways
Re-staking is a mechanism that allows users to reuse staked assets on multiple blockchain networks or applications to provide additional security. In this way, users can reuse existing staked assets, improve the scalability and liquidity of the system, and earn additional rewards.
The restaking stack is a conceptual framework that systematically divides the main components of the restaking ecosystem, including the base blockchain network, staking infrastructure, staking platform, restaking infrastructure, restaking platform, and restaking applications.
Re-staking infrastructure provides the technical foundation for re-staking, allowing pledged assets to be used to secure other protocols or networks. Well-known projects in this field include Ethereum's EigenLayer, Bitcoin's Babylon, and Solana's Solayer. These projects focus on ensuring liquidity, enhancing security, and improving the scalability of the network.
Restaking has redefined blockchain security and has quickly grown into an ecosystem that is highly attractive due to its ability to enhance scalability and liquidity through economic security, although there are still concerns about the risk and profitability of the restaking model.
The next part of this series will explore the restaking platforms and applications that are critical to the potential mass adoption of the restaking ecosystem.
As of September 28, 2024, the total value locked (TVL) of the restaking ecosystem, led by EigenLayer, is approximately $15.3 billion. This figure exceeds crypto lending platform Aave’s TVL of $13 billion and is more than half the TVL of leading Ethereum liquid staking platform Lido ($26.48 billion). This highlights the significant growth of the restaking ecosystem.
Given this, you might be wondering what restaking is and why it has captured the interest of crypto holders and driven such growth. To answer this question, this two-part series will explain what restaking is, where to look at the expanding restaking ecosystem, and the interesting projects within it.
This series will start with an overview of restaking, define the restaking stack around a strong restaking infrastructure, and explore projects categorized as restaking infrastructure and their unique characteristics.
1. Brief Introduction of Re-Pledge
1.1 Before re-staking
When Ethereum moved from Proof of Work (PoW) to Proof of Stake (PoS) through the much-anticipated “merge” upgrade, many ETH holders began staking their ETH to support network stability and earn staking rewards. This process gave rise to a variety of staking services and platforms.
The first need that emerged was staking pools. The minimum 32 ETH required for staking was a challenge for smaller Ethereum holders. To solve this problem, staking pools were developed to allow people with less than 32 ETH to participate in Ethereum staking.
The next problem is liquidity. When staking ETH, the asset is locked in a smart contract, which leads to reduced liquidity. In the initial stages of the PoS transition, the staked ETH could not even be withdrawn, which effectively meant that the staked ETH had almost no liquidity. To address this problem, services such as Lido and Rocket Pool issued Liquid Staking Tokens (LSTs). The value of LSTs matches the staked ETH, allowing stakers to use them in other DeFi services as a substitute for their staked ETH. In effect, LSTs enable users to regain liquidity for part of their staked assets.
With liquidity secured through LSTs, new opportunities to leverage these tokens emerge. However, LSTs are primarily limited to the Ethereum DeFi ecosystem and are not used to secure extended networks built on Ethereum, such as L2s. This introduces new challenges to Ethereum’s security model, such as:
Scalability issues: Ethereum’s limited transaction processing capabilities mean that during periods of high demand, the network can become congested, causing transaction fees to increase significantly. This makes it difficult for dApps and DeFi platforms to handle large numbers of users. Layer 2 (L2) solutions have emerged to address this problem, but they require their own security and authentication mechanisms.
Additional security requirements: Ethereum's basic security mechanisms operate at the protocol level and rely on participants to stake ETH to maintain network security. However, these built-in security measures do not always meet the specific security requirements of various L2s and applications, so each application requires an additional layer of security.
Liquidity Limitations: While Ethereum has activated the staking mechanism through PoS, a key problem remains: the staked assets are only used for network security. For example, the staked ETH cannot be used for other useful functions or applications. This limits liquidity and hinders the ability of network participants to explore additional income-generating opportunities.
These challenges highlight the need for new security mechanisms tailored to the current state of Ethereum and PoS blockchains.
1.2 The rise of re-staking
The need for new security methods ultimately gave rise to the concept of re-hypothesis.
“Restaking is the latest answer to a core security problem in crypto: how to use economic games to protect decentralized computing systems.” — Sam Kessler, CoinDesk
As mentioned in the quote, re-staking uses financial engineering principles to enhance the security of the blockchain through economic security.
Before diving into re-staking, it is important to understand how PoS blockchains maintain security. Many blockchains, including Ethereum, have adopted PoS, and one common attack method is for an adversary to accumulate enough staked assets to affect the network. The cost of compromising a blockchain is usually proportional to the total value staked in the network, which acts as a deterrent to attackers.
Restaking takes this concept one step further, aiming to apply economic security more broadly. In major protocols such as Ethereum, a large amount of capital is already staked. Restaking repurposes this capital to provide enhanced security and functionality at the L2 or application level. Due to the added security, restaking can earn higher returns than traditional staking. Therefore, restaking becomes a solution to the challenges mentioned above:
Scalability: Restaking allows L2 solutions and other applications to leverage the security of the main blockchain’s staked resources. This enables L2 solutions to maintain a higher level of security by leveraging the mainnet’s staked capital without building an independent mechanism.
Enhanced Security: Restaking allows the staked resources of the main blockchain to be used not only to secure the mainnet, but also to validate and protect application-level functionality. This creates a more robust and comprehensive security framework.
Liquidity Enhancement: Re-staking aims to enable staked mainnet assets to be re-used for other purposes. For example, staked assets can be used for validation tasks in different networks or applications, thereby increasing the overall liquidity and utility of the security ecosystem while providing additional rewards to participants.
In summary, restaking emerged as a response to the limitations of PoS mainnets such as Ethereum, with the goal of enabling these networks to support more participants while providing greater security and liquidity.
One notable early implementation of the re-staking concept is Interchain Security (ICS). Cosmos operates an ecosystem where multiple independent blockchains interact through cross-chain concepts. However, each chain needs to maintain its own security, which brings a burden. ICS solves this problem by allowing blockchains in the Cosmos ecosystem to share secure resources.
The validators of the Cosmos Hub are responsible for securing the network, and new or smaller chains can take advantage of this security without having to build their own validator network. This approach reduces security costs and helps new blockchain projects more easily launch in the Cosmos ecosystem. However, challenges such as increased infrastructure costs, limited utility of native tokens, and the need for high profitability of consumer chains have limited the success of ICS.
Nonetheless, these efforts paved the way for the Ethereum ecosystem’s EigenLayer, which has become a leader in the restaking industry. Therefore, to thoroughly understand restaking, studying EigenLayer, which is well established in the Ethereum ecosystem, is a good starting point. Let’s dive into EigenLayer and the restaking ecosystem.
1.3 Example using EigenLayer
1.3.1 From decentralized security to refactored security
How does re-staking fundamentally work to provide greater security and liquidity?
“If I have seen further, it is by standing on the shoulders of giants.” - Isaac Newton
This quote from Isaac Newton acknowledges the contributions of past scientists to his achievements. More broadly, it suggests that working with what you already have is often a wise choice.
Many current blockchain services rely on large L1 networks, leveraging their ecosystem, trust, and security resources. However, choosing a less mature network or trying to become a major player independently can be risky, as these projects may encounter setbacks before reaching their full potential.
To illustrate this with EigenLayer, let's consider the scenario shown in the figure below.
In the figure, both ecosystems have $13 billion in staked capital each. On the left, Ethereum and Active Validation Service (AVS, a middleware network service) are not connected to each other, while on the right, they are connected via EigenLayer.
Left Ecosystem: Here, Ethereum and AVS are not directly connected, so while value can be transferred between networks via bridging, this has nothing to do with shared security. As a result, Ethereum and AVS cannot share economic security, leading to fragmented security. Attackers may choose to target the network with the lowest staked capital. This leads to fragmented security, where the cost of corruption (CoC) is consistent with the minimum required amount. This situation creates a competitive environment between services, rather than synergy, and may weaken Ethereum's economic security.
Right Ecosystem: What if Ethereum and AVS are interconnected? EigenLayer integrates Ethereum and AVS through the concept of re-staking, merging decentralized security into a reconstructed form. This integration has two benefits: AVS services can share the capital of the Ethereum network instead of competing with it, and all AVS services can take advantage of shared economic security. This effectively creates an environment that allows these "giants" to combine their strengths, allowing them to see further together.
1.3.2 Pillars of re-staking (taking EigenLayer as an example)
With this explanation, we can understand that AVS services can inherit the economic security of Ethereum, allowing them to take advantage of significant security at a lower cost. However, this complex financial ecosystem relies on a variety of actors to function smoothly. Let’s dive into these roles:
Active Validation Services (AVS): AVS are services that require a decentralized validation system, such as a DA layer, sidechain, or oracle network. AVS relies on node operators to maintain network security by reliably running nodes. AVS uses two mechanisms: slashing, where part or all of the staked amount is forfeited due to poor performance, and rewards for successful operations. AVS can leverage the security of Ethereum by leveraging re-staked ETH without having to build a separate trust network.
Restakers: Restakers are individuals or institutions that restake native ETH or LST on the Ethereum beacon chain. If a restaker is unsure of which specific AVS to choose or wants to receive additional rewards, they can delegate their restake capital to a node operator. In this case, the restaker hands over their capital to the node operated by the node operator, thereby receiving restake rewards.
Node Operators: Node operators receive capital entrusted by re-stakers and operate nodes to perform verification tasks required by AVS. Node operators use the re-staked capital to build and operate nodes with higher security. They play a key role in maintaining the reliability and security of AVS and receive re-stake and node operation rewards for doing so.
1.3.3 Merge into one
EigenLayer integrates these roles into an open market structure, enabling each role to operate freely according to economic principles.
In this setting, re-stakers entrust their assets (such as ETH, LST, or LPT) to node operators, who in turn protect AVS services through their nodes and receive rewards. At the same time, AVS pays operating rewards to node operators to thank them for their contribution to security, thereby ensuring the security and trust of the network.
1.3.4 Strengthening the re-staking ecosystem
EigenLayer is a typical example of re-staking, providing a comprehensive perspective on this concept. Most emerging re-staking services strictly follow the core principles of re-staking, making EigenLayer an effective reference for understanding the re-staking model.
With EigenLayer at the forefront, the restaking ecosystem is expanding. This growth is not just in size; the ecosystem is becoming more complex, with more specific roles and categories emerging. This allows for a deeper understanding of the expanding ecosystem. In the next chapter, we will take a closer look at the restaking stack and explore the projects in each category.
2. Re-staking stack
Since the restaking ecosystem is still actively developing, it may be challenging to clearly delineate each category. However, as the ecosystem matures and its positioning stabilizes, it will promote the development of more advanced projects. Using available data and my perspective, I will introduce a framework for categorizing the restaking ecosystem - the restaking stack.
2.1 Based on blockchain network
The blockchain network layer is the basis for staking or re-staking, with its own native token and security mechanism. PoS (Proof of Stake) blockchains like Ethereum and Solana provide a stable and efficient staking and re-staking environment due to their huge TVL (Total Value Locked). Although Bitcoin is not a PoS blockchain, due to its dominant position in blockchain capital, people have been working to incorporate its economic security into re-staking.
Ethereum: Ethereum is the main blockchain network for restaking and plays a key role in the entire ecosystem. With its PoS system and smart contract capabilities, Ethereum provides users with the opportunity to participate in various restaking activities through platforms such as EigenLayer.
Bitcoin: Bitcoin lacks the native staking capabilities that PoS blockchains have due to its PoW (Proof of Work) mechanism. However, projects like Babylon are working to integrate Bitcoin's vast capital into the re-staking ecosystem, leveraging its economic security to support other blockchains. Projects like Babylon allow Bitcoin's capital to be used without wrapping or cross-chain bridging, allowing Bitcoin staking directly on their blockchain.
Solana: Solana is known for its high performance and low transaction costs, providing an ideal environment for staking, DeFi, NFTs, and re-staking. As Solana’s staking infrastructure continues to develop, platforms like Solayer are emerging that aim to leverage Solana’s strengths by providing a unique re-staking model and establish an important position for Solana in the re-staking ecosystem.
2.2 Staking Infrastructure
The staking infrastructure layer includes systems that allow participants to stake their native tokens, thereby improving the security and efficiency of the blockchain network. These infrastructures are at the core of the PoS consensus mechanism and support the decentralized process of block verification and generation. Participants stake their assets to become validators, helping to maintain the stability of the network and earn rewards. In addition, the staking infrastructure is also responsible for monitoring the behavior of validators and enhancing security by cutting penalties for improper behavior.
Beacon Chain: The Beacon Chain plays a key role in the Ethereum network's transition to PoS, improving scalability, security, and energy efficiency. Unlike the previous PoW Ethereum, the Beacon Chain operates around validators who stake their local ETH. The Beacon Chain is responsible for selecting validators and managing the process of proposing and validating blocks. This shift reduces the high energy consumption of PoW mining while maintaining the decentralization of the network and improving efficiency. In addition, the Beacon Chain oversees users participating in validation, locks their staked local ETH, and monitors whether validators are validating blocks correctly. If validators misbehave, they will face penalties through the slashing process, which involves confiscating their staked ETH.
Staking Pools: Solana’s staking pools enhance network security and simplify the process for users to participate in staking. Staking pools aggregate smaller SOL stakes, enabling users to collectively support a single validator. Through this process, users who delegate their stake to validators receive rewards when those validators create blocks or verify transactions. Staking pools also improve network stability by distributing staked SOL to reliable validators.
2.3 Pledge Platform
The staking platform layer includes services that enable users to contribute to the security and operation of the blockchain network while maintaining asset liquidity. These platforms play a key role in PoS blockchains, providing simple services that allow users to stake local tokens and receive rewards. Staking platforms do more than just lock assets, they also provide liquidity staking, tokenizing staked assets and enabling users to use these assets in DeFi services. This structure enables users to maintain liquidity and maximize rewards while participating in network operations. Through these features, staking platforms simplify the user experience and make it easier for more users to participate in staking.
Lido: Lido is one of the most popular liquidity staking platforms in the Ethereum ecosystem, allowing users to stake their native ETH and receive stETH in return. This liquidity token maintains the value of the staked ETH, enabling users to earn additional rewards through other DeFi services. Lido's focus on Ethereum has since expanded to support Polygon's PoS network.
Rocket Pool: Rocket Pool is a community-owned decentralized staking platform compatible with Ethereum's native ETH staking. Originally conceived in 2016 and launched in 2021, it aims to provide a solution for users who do not have the technical ability to run a node or the financial resources to meet the 32 ETH requirement. Rocket Pool is committed to building a liquid and reliable platform that enables users to leverage their staked assets across a variety of services.
Jito: Jito is a liquidity staking platform that provides Solana users with MEV (maximum extractable value) rewards. Users stake their native SOL through Jito's staking pool and receive JitoSOL tokens, which accumulate staking and MEV rewards while maintaining liquidity. Jito aims to optimize returns for users holding JitoSOL and enrich Solana's DeFi ecosystem.
Sanctum: Sanctum leverages Solana's high speed and low fees, providing enhanced security through an open source and multi-signature framework as a staking platform. It allows users to use staked SOL in DeFi services. By integrating liquidity from various LST pools, it solves the liquidity fragmentation problem and enables users to access richer liquidity pools. Notably, through the Infinity Pool, users can deposit LST or SOL, receive INF tokens, and simplify staking and liquidity provision. In addition, Sanctum runs a rewards program called Wonderland, which encourages users to actively participate by providing points and rewards for performing specific tasks or using the platform.
2.4 Re-staking Infrastructure
The re-staking infrastructure layer is critical to improving the economic security of blockchain networks while providing scalability and flexibility. It enables users to reuse their staked assets to secure multiple networks or applications, providing re-stakers with the opportunity to participate in a variety of services while maximizing rewards. Applications built on this infrastructure can ensure a stronger security framework and expand their functionality by leveraging re-staking assets. The re-staking infrastructure also supports re-staking platforms and applications, allowing them to create customized staking and security models. This enhances the scalability and interoperability of the blockchain ecosystem, making re-staking a key technology for maintaining a decentralized network. Below are some examples, and more details on the re-staking infrastructure will be provided in Chapter 3.
EigenLayer: EigenLayer is a staking infrastructure built on Ethereum that enables users to staking their native ETH or LSTs to secure additional applications and earn additional rewards. By reusing staked ETH across various services, EigenLayer lowers the capital requirements for participation while significantly increasing the trustworthiness of individual services.
Symbiotic: Symbiotic is a restaking infrastructure that provides an open and accessible shared security model for decentralized networks. It enables builders to create custom staking and restaking systems with modular scalability and decentralized operator rewards and slashing mechanisms, providing enhanced economic stability to the network.
Babylon: Babylon connects Bitcoin’s strong economic security to other blockchains, such as Cosmos, with the goal of strengthening security and facilitating cross-chain interoperability. Babylon’s integration enables networks connected through it to leverage Bitcoin’s proven security for more secure transactions. It leverages Bitcoin’s hash power to enhance finality and provides a set of protocols to securely share Bitcoin’s security with other networks.
Solayer: Solayer builds on Solana's network by leveraging economic security to scale application chains, providing application developers with custom blockspaces and efficient transaction alignment. It leverages re-staked SOL and LSTs to maintain network security while enhancing specific network features designed to support scalable application development.
2.5 Re-staking Platform
The re-staking platform layer includes those platforms that provide additional liquidity or combine re-staking assets with other DeFi services, enabling users to maximize their rewards. These platforms usually issue Liquidity Re-staking Tokens (LRTs) to further enhance the liquidity of re-staking assets. They also promote user participation in re-staking through flexible governance models and reward systems, thereby contributing to the stability and decentralization of the re-staking ecosystem.
Ether.fi: Ether.fi is a decentralized re-staking platform that allows users to directly control their re-staking keys. It provides a service marketplace where node operators and re-stakers interact. The platform issues eETH as a liquidity staking token and decentralizes the Ethereum network through a multi-step re-staking process and node service provision.
Puffer.fi: Puffer.fi is a decentralized native liquidity re-staking platform based on EigenLayer. It allows anyone with less than 32 ETH to stake their Ethereum native tokens, maximizing rewards through integration with EigenLayer. Puffer.fi provides high capital efficiency, providing liquidity and PoS rewards through its pufETH token. Re-stakers can get stable returns without the need for complex DeFi strategies, and Puffer.fi's security mechanism ensures asset security.
Bedrock: Bedrock supports multiple asset types in its liquidity re-staking platform, developed in partnership with RockX. It provides additional rewards by re-staking assets such as wBTC, ETH, and IOTX. For example, uniBTC re-stakes BTC on the Ethereum network for enhanced security, while uniETH similarly re-stakes ETH to maximize rewards through EigenLayer. Bedrock uses a capped token economic structure to prevent total issuance from growing, aiming to increase token value over time.
Fragmetric: Fragmetric is a liquidity re-staking platform in the Solana ecosystem that solves the reward distribution and slashing rate issues by leveraging Solana's token scaling capabilities. Its fragSOL token sets a new standard for re-staking on Solana, providing a platform structure that enhances security and profitability.
2.6 Re-staking Application
The re-staking application layer includes decentralized services and applications that leverage re-staking assets to enhance the security and functionality of existing blockchain infrastructure. These applications ensure economic security through re-staking while focusing on providing specific functions such as data availability storage, oracles, physical infrastructure verification, and cross-chain interoperability.
By allowing validators of Ethereum and other blockchain networks to re-stake their assets across multiple services, these applications reduce capital costs while improving security and scalability. They also ensure data integrity and security through a decentralized process and apply economic incentives and penalties to ensure reliability. These applications enhance the scalability and efficiency of blockchain systems and promote interoperability between different services.
EigenDA: EigenDA is a highly scalable data availability (DA) storage solution for Ethereum rollups and is integrated with EigenLayer. EigenLayer requires operators to stake a security deposit to participate and penalizes operators who fail to properly store and verify data. This incentivizes decentralized and secure data storage and enhances the scalability and security of EigenDA through EigenLayer's re-staking mechanism.
Eoracle: Eoracle is an oracle service in the EigenLayer ecosystem that uses re-staked ETH and Ethereum validators for data verification. Eoracle aims to create a decentralized competitive market for data providers and users, automate data verification, and enable smart contracts that integrate external data sources.
Witness Chain: Witness Chain supports the development of new products and services for various applications and decentralized physical infrastructure networks (DePIN). It uses the DePIN Coordination Layer (DCL) module to convert physical properties into verifiable digital proofs. In the EigenLayer ecosystem, EigenLayer operators run DePIN challenge clients to ensure a reliable environment for their verification process.
Lagrange: Lagrange is the first zero-knowledge AVS on EigenLayer. Its state committee is a decentralized node network that uses zero-knowledge technology to ensure the security of cross-chain interoperability. Lagrange's ZK MapReduce solution supports efficient cross-chain operations while ensuring security and scalability. By leveraging the economic security of EigenLayer, Lagrange improves performance and strengthens cross-chain messaging and rollup integration.
Through this overview of the restaking technology stack and project examples, we can see that as the restaking ecosystem matures, its structure becomes more complete, providing a deeper understanding. How about taking a deeper look at these emerging categories? In this series, we will first focus on the restaking infrastructure, while other components will be explored in subsequent parts.
3. Re-staking Infrastructure Ecosystem
Re-staking infrastructure is a foundational framework that enables the reuse of staked assets across different networks and protocols to enhance network security and maximize utility. As the concept of re-staking has gained popularity, major blockchain networks like Ethereum, Bitcoin, and Solana have developed infrastructures that are suited to their unique characteristics. In this section, we will explore the reasons for the emergence and evolution of re-staking infrastructure in these networks, the advantages and challenges it faces, and the impact of various projects on re-staking infrastructure.
3.1 Ethereum
Ethereum’s move from PoW to PoS during the “merge” upgrade set the stage for the growth of the restaking infrastructure. Ethereum’s PoS model relies on staked assets to secure the network, but the ability to re-use those assets for other protocols has greatly increased interest in restaking.
Ethereum has always focused on scalability and achieved this goal through L2 solutions. However, as Ethereum founder Vitalik Buterin pointed out, this approach has led to decentralized security and ultimately weakened Ethereum's security model. EigenLayer, as the first solution, solves this problem through economic security, allowing staked Ethereum assets to be used in other protocols to enhance security and scalability.
EigenLayer provides re-staking of Ethereum assets across different protocols while maintaining basic security and leveraging a large network of operators for stable economic security. It supports re-staking of native ETH and plans to expand to LSTs and ERC-20 tokens, providing a potential solution to Ethereum's scalability challenges.
The concept of re-staking is spreading in the Ethereum ecosystem, and other projects are working to address Ethereum's limitations. For example, Symbiotic is improving Ethereum's security by integrating with other DeFi services. Symbiotic supports re-staking of multiple assets, including LSTs like wstETH, as well as assets like sUSDe and ENA through a partnership with Ethena Labs. This allows users to provide additional security resources through re-staking and improve Ethereum's PoS security. In addition, Symbiotic issues ERC-20 tokens such as LRT to provide a flexible reward structure, allowing efficient use of re-staked assets in various protocols.
Another re-staking infrastructure, Karak, aims to address Ethereum's structural inefficiencies that make re-staking operations challenging. Karak provides multi-chain support, enabling users to deposit assets on chains such as Arbitrum, Mantle, and Binance Smart Chain. It supports re-staking ERC-20 tokens, stablecoins, and LSTs in a multi-chain environment. Karak uses its own L2 chain to store assets, maximizing scalability while ensuring security.
3.2 Bitcoin
Bitcoin, as a PoW-based network, has different characteristics than PoS networks where the staked asset is directly tied to security. However, Bitcoin’s dominance in market capitalization has fueled the development of restaking concepts that leverage Bitcoin’s economic security to create additional income in other blockchains. Projects like Babylon, Pell Network, and Photon have integrated Bitcoin’s security into their ecosystems through a variety of methods, thereby enhancing its scalability.
Bitcoin's PoW system is one of the most secure in the world, making it a valuable asset for re-staking infrastructure. Babylon leverages Bitcoin's staking and re-staking capabilities to enhance the security of other PoS blockchains. It converts Bitcoin's economic value into economic security to protect other blockchains. It operates its own PoS chain using the Cosmos SDK, supporting non-custodial staking and re-staking directly from the Bitcoin blockchain without the need for third-party trust.
Bitcoin also faces challenges with liquidity and additional income opportunities. Pell Network was created to provide liquidity and income opportunities for Bitcoin holders, using cross-chain technology to integrate Bitcoin into the DeFi ecosystem for additional benefits.
The biggest limitation of Bitcoin is the lack of native smart contract support. While PoW provides strong security, its design makes it difficult to program internally through smart contracts. Photon enables staking and re-staking directly on the Bitcoin mainnet by extending Bitcoin's ability to execute smart contracts without changing its core structure. This ensures that all processes related to staking and re-staking are verified on the Bitcoin mainnet while providing flexible staking options.
3.3 Solana
Solana is known for its high transaction throughput and low fees, making it an ideal environment for the development of restaking infrastructure. Multiple projects in the Solana ecosystem have already adopted a restaking model to take advantage of these benefits.
Solana's rapid growth has directly benefited validators, but achieving fair distribution of economic benefits in the broader Solana ecosystem has been a challenge. Solayer solves this problem by providing a re-staking infrastructure that focuses on economic security and execution to expand the application chain network, providing a framework for staking native SOL and LSTs to support specific application networks. It also allows users to re-use their staked assets in other protocols to maximize returns.
Solayer draws inspiration from Ethereum’s restaking infrastructure, such as EigenLayer, taking a similar approach to user convenience while adapting its restaking model to Solana’s unique properties. This ultimately aims to drive the evolution of the Solana ecosystem.
Already recognized for its role in the Solana staking infrastructure, Jito is working to expand its influence in the re-staking space. Jito is building its re-staking service on top of its established Solana infrastructure, which has generated a lot of interest from users due to its potential scalability and reliability. Jito's vision is to optimize MEV in the block creation process through a re-staking solution using SPL-based assets. This not only improves security, but also provides greater profit opportunities for re-stakers.
Picasso supports Solana's scalability by building a cross-chain scaling framework and re-staking mechanism. Picasso is developing a re-staking layer for Solana as well as the Cosmos ecosystem, introducing an extension concept that allows users to re-stake assets in multiple PoS networks. It aims to bring the re-staking ecosystem that was previously limited to Ethereum to the Solana and Inter-Blockchain Communication (IBC) ecosystem, providing tailor-made re-staking services with a grand vision.
3.4 Increasingly Complex Restaking Infrastructure
A major risk of re-staking is that it is essentially a derivative financial asset rather than a core asset. Some see re-staking as a promising investment opportunity and a new advance in crypto security, while others see it as a riskier re-staking model with overly generous returns. In addition, the re-staking infrastructure has not been tested by extreme markets such as the “crypto winter”, raising questions about its potential stability.
If this stability is not demonstrated, re-hypothecation may be criticized for the risks inherent in its re-hypothecation model. In addition, the ecosystem has not yet expanded to the economies of scale required to be able to establish a sustainable business model, which remains a challenge.
Nonetheless, the rapid growth of the restaking ecosystem, especially in terms of restaking infrastructure, is undeniable. The increasingly sophisticated structure of the ecosystem supports this growth momentum. As the ecosystem grows, concerns about profitability may be addressed, and ultimately restaking infrastructure will become a key player in the crypto and blockchain security space.
Classification and definition of an ecosystem shows that it is ready for the next stage of development. The emergence of the Redemption Stack reflects the significant progress individual projects have made in developing narratives and products.
Now, as the restaking infrastructure matures, the focus will turn to the restaking platforms and applications that will determine whether the restaking ecosystem can be widely adopted. Therefore, the next part of this series will take a deeper look at the restaking platforms and applications and explore their potential in driving widespread adoption of the ecosystem.
