Ethereum staking has taken the space by storm since 2021’s Merge. The new proof-of-stake consensus mechanism allows anyone to participate in securing Ethereum’s network in exchange for a share of rewards primarily derived from transaction fees.
Since launching, ETH staking has garnered tremendous demand from individuals and institutions alike. The advent of liquid staking tokens (LSTs) has further boosted adoption by drastically lowering barriers to entry. As a result, nearly 24% of ETH’s supply is now securing the network, making it highly resilient.
However, novel networks struggle to build similar staking support. This means that they’re forced to develop their products without the same resources or robust security.
Enter EigenLayer. Launched in June 2023, the bleeding-edge restaking protocol allows new chains and protocols to share ETH’s network security and strengthen their offerings. The tokenless protocol has seen impressive demand, garnering more than $260M in TVL thus far.
In line with this growing interest, EigenLayer has onboarded a host of leading LSTs as collateral on the platform. Origin Ether (OETH), Ethereum’s second largest yield aggregator, is among the latest additions to the protocol, bringing restaking to a brand-new audience.
How Does Restaking Work?
Restaking provides an avenue for developers to harness Ethereum’s robust security on novel chains and dApps.
Users can restake native staked ETH, LSTs, and ETH LP tokens on EigenLayer. These restaked assets are lent out to builders to provide a solid foundation for protocol security. Projects using restaked assets pay a premium for this service, which is distributed to restakers in the form of rewards.
Beyond allowing projects to share ETH’s security, restaking also offers a unique opportunity for ETH stakers to compound their returns.
It’s important to note that restaking carries additional risks, as the same assets are being reused across multiple networks. As a result, restaked assets are exposed to heightened slashing risks, as each network carries its own set of rules and parameters.
However, restakers are compensated for this risk in the form of heightened rewards.
Preparing to Scale
In tandem with the addition of OETH and other LSTs, EigenLayer is raising its deposit cap on restaked assets. From Monday, users will be able to deposit a total of 200K ETH in assets per LST. However, should total LST deposits exceed 500K ETH, a pause mechanism will be activated.
This incremental approach allows EigenLayer to support new assets without compromising security.
Given the significant demand for EigenLayer’s services, it’s possible that the current caps may be reached soon after the new deposit caps go live.
OETH’s EigenLayer Integration
The addition of OETH to EigenLayer is particularly exciting given Origin Ether’s rapidly expanding presence across DeFi. Since launching in May, OETH has garnered more than 30,000 ETH in TVL. The novel LSTfi protocol is backed by ETH and reserves of Lido stETH, Frax’s frxETH, and Rocket Pool’s rETH, offering LST holders a seamless platform to boost their returns.
OETH’s incisive strategies generate yields well above base rewards rates for users, boasting a trailing 30-Day APY of over 6%.
The EigenLayer integration marks one of many milestones on OETH’s quest to become one of DeFi’s most integral money legos. Beyond restaking, OETH holders can also leveraged yield on Pendle Finance, and liquidity mine incentivized pools on Curve and Balancer.
Restaking OETH via EigenLayer allows users to further compound their yield, while also participating in instruments at the very forefront of blockchain innovation.
As crypto continues its march toward mass adoption, primitives like restaking will be invaluable for new builders who lack the deep resources of established Ethereum projects. By harnessing OETH and leading LSTs for restaking, savvy investors could position themselves well for the sector’s future growth.
