Staking, Liquid Staking & Restaking
Staking is the closest thing crypto has to a base interest rate — and one of the largest categories in DeFi. But between plain staking, liquid staking tokens, and restaking, each layer adds yield by adding risk. This guide walks up the stack and shows you exactly what you are being paid for at each step.
Native Staking: Where the Yield Comes From
Proof-of-stake chains pay validators for securing the network: proposing blocks, attesting to them, and putting capital at stake as a guarantee of honesty. The rewards come from protocol issuance and transaction fees — on Ethereum this has meant roughly 2–4 % per year in recent years. Misbehaving or negligent validators can be slashed, losing part of their stake.
Running a validator yourself takes 32 ETH and real operational discipline. Most chains therefore offer delegation, and most users reach staking yield through a middleman — which is where the next layer begins.
Liquid Staking: Staking Without Locking
Liquid staking protocols pool user deposits, run the validators, and hand you a liquid staking token (LST) — stETH from Lido, rETH from Rocket Pool — that represents your staked position and grows with the rewards. The breakthrough: your capital keeps working. You can sell the LST, lend it, or use it as collateral while it earns staking yield underneath.
The price: new risks. The LST can trade below the underlying stake (stETH did in 2022), the protocol's smart contracts can fail, and concentration matters — Lido alone accounts for roughly half of the liquid staking category, which is a systemic concern for Ethereum itself, not just for Lido users.
Restaking: The Third Layer
Restaking, pioneered by EigenLayer, lets staked ETH or LSTs be pledged again to secure additional services — oracles, bridges, data layers, so-called AVSs — in exchange for extra reward streams. Liquid restaking tokens (LRTs, e.g. from ether.fi or Kelp) made the whole construction tradable.
The same collateral now backs multiple systems, and each adds its own slashing conditions. The market learned what that means in April 2026, when an exploit at Kelp DAO of roughly $300 million triggered a withdrawal cascade of over $5 billion across the restaking sector. EigenLayer itself has repositioned around being a "verifiable cloud" — a signal that restaking is infrastructure underwriting, not free yield.
How the Risks Stack
Each layer inherits every risk below it and adds its own. Native staking carries validator and slashing risk. Liquid staking adds smart-contract and depeg risk on top. Restaking adds cascading slashing and the risk of every service it secures — on top of everything below. The extra yield from each layer is usually a few percentage points; the added risk does not scale so politely.
Layer 1: Native staking
You earn: protocol issuance plus fees, roughly 2–4 % on ETH. You risk: slashing for validator faults, lockup/exit queues, and the operational burden if you run your own node.
Layer 2: Liquid staking (stETH, rETH)
You earn: the same staking yield, while keeping your capital liquid and usable in DeFi. You add: smart-contract risk, LST depeg risk, and exposure to provider concentration.
Layer 3: Restaking (EigenLayer, LRTs)
You earn: extra reward streams from the services your stake secures. You add: cascading slashing conditions, the failure risk of every secured service, and LRT liquidity risk — as the 2026 Kelp episode demonstrated.
A Practical Path
You do not need the whole stack. Most users are well served by the first two layers, entered deliberately.
Start with a major LST
Lido or Rocket Pool on Ethereum, entered with an amount you would lend, not an amount you would bet. Understand first how your token accrues value — rebasing balance versus rising redemption price.
Benchmark against the base rate
The native staking yield is the honest baseline. Any product offering meaningfully more than that on the same asset is taking extra risk somewhere — your job is to find out where before depositing.
Check the peg before you buy
LSTs trade on the open market and can sit above or below their redemption value. Buying at a discount is a bonus; buying above par or during a depeg panic is how staking yield turns negative.
Treat restaking as venture exposure
Only restake money whose total loss you can absorb, and know which AVSs your collateral secures and what their slashing conditions are. If the provider cannot tell you plainly, that is your answer.
Do not loop until you understand liquidations
Depositing an LST as collateral to borrow ETH and stake again is leveraged staking. It amplifies yield, depeg risk, and liquidation risk all at once — a strategy for people who can explain exactly where its break-even sits.
Beyond Ethereum
The same three-layer logic repeats on other chains: Solana has native delegation and liquid staking (Jito, Marinade), and Bitcoin gained a staking layer through Babylon — the survivor of a BTCfi sector that shrank by roughly three quarters from its peak. Wherever you stake, ask the same two questions: where does the yield come from, and what exactly can take my stake?