Key Takeaways
Risks of Restaking
We identify three primary types of risk in the process of restaking. Most directly, slashing is a risk if participants in the restaking ecosystem cannot consistently follow the agreed retaking rules. High usage of restaking can also negatively affect liquidity on the Ethereum network, as a large quantity of ETH is locked in various staking pools. Finally, high usage may also lead to concentration risks if only a few protocols end up with most of the restaking market share.
Potential Mitigations
We then consider potential ways to mitigate the risks, including parameters like TVL caps, slashing quantities, and Insurance parameters. We also consider how Liquid Restaking Tokens (LRTs) can help reduce liquidity and concentration risks by allowing restaked assets to move freely on Ethereum.
.png)
