Restaking: yield on yield and where in the matryoshka the risk sits

Restaking is the next floor above staking: already-staked ETH (or its LST) is pledged again to guard third-party services - oracles, bridges, DA layers (AVSes, in EigenLayer's terms). One pool of capital guards several systems and collects several yields.

Why services and stakers want it

Building an own validator network from scratch is expensive for a new protocol - it is cheaper to rent economic security from a pool of restakers: their collateral can be slashed for violations, in that service's favor. For the staker - extra percents on the same capital.

Where in the matryoshka the risk sits

• Not only the yields add up but the slashings too: a fault at any of the services you signed up for cuts your base collateral.
• The operator middleman: delegating to an operator adds their competence to your risk chain.
• LRT wrappers: liquid restaking tokens are a third-order derivative (ETH → LST → LRT) with their own depegs and contracts.
• The systemic question: ether re-pledged many times over - efficiency, or the whole ecosystem's hidden leverage? The honest answer: we will find out in the first big slashing incident.

The rule is the same as everywhere: an extra percent = an extra, very specific risk. Read WHAT exactly your restake is signed up for. Breakdowns - in the section.