The Savvy ReStaker’s Checklist: Navigate Risks & Maximize Rewards

Alexander Abramovich
8 min readMay 28, 2024

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Restaking is a powerful strategy for maximizing your rewards in the Ethereum ecosystem. However, it requires careful planning and execution. This checklist covers all critical aspects of restaking. For a deeper understanding of restaking, including its mechanics and rationale, as well as insights into EigenLayer’s architecture and liquid restaking, refer to my previous article on EigenLayer here. Following these tips can improve your restaking strategy and overall staking experience.

In this guide, the examples provided will primarily utilize the EigenLayer ecosystem. However, the principles and strategies discussed are broadly applicable, making this article valuable for anyone interested in restaking, regardless of the specific platforms they use. Understanding these general patterns allows you to effectively apply them across various ecosystems and enhance your staking experience.

Understand the Overall Restaking Mechanics

Restaking involves staking Liquid Staking Tokens (LST) or Liquid Restaking Tokens (LRT). You can obtain LST/LRT in two primary ways:

  • Stake ETH at a liquid restaking token (LRT) platform.
  • Stake ETH at a liquid staking platform to receive a liquid staking token (LST) and restake it at an LRT platform.

Dare to Discover Multistep Investing Strategies

  • Trade ETH (or other tokens) for LST/LRT on any decentralized exchange (DEX) and restake it at an LRT platform.
  • Explore custom strategies on different platforms. For instance, Ether.Fi and its partners have created a special Liquid ETH Yield Vault that offers attractive bonus point multipliers when you deposit eETH, a liquid staking token you can acquire by staking ETH or trading for it.

The possibilities don’t end there. Once you have LST or LRT, you can:

  • Restake them on another LRT platform like Renzo Protocol or Swell.
  • Use as collateral on platforms like Zerolend.
  • Trade them for other tokens on DEXes.
  • Restake with leverage repeatedly combining the three above.
  • Transfer them across bridges to other Layer 2 (L2) networks or the Ethereum Mainnet.

After restaking, you can earn various perks, such as:

  • Coins (e.g., REZ from Renzo Protocol) that can be traded or converted to tokens at the end of an epoch.
  • Points that might become tradable coins in the future. For example, staking on Ether.Fi can earn you EigenLayer points, Ether.Fi loyalty points, and 3%+ APY staking rewards.

Beyond restaking, you can earn rewards by:

  • Borrowing against collateral.
  • Providing liquidity to DEXes, also known as “liquidity mining”.
  • Trading on DEXes; for instance, Hyperliquid previously rewarded traders with points based on trading volume.

Despite its potential, restaking comes with its quirks and challenges due to the early stage of the technology and user experience (UX). The following checklist aims to help you navigate these challenges and minimize unpleasant surprises.

Always Remember Your Way Back Home

When implementing a multi-step strategy, such as trading tokens, bridging them to another chain, and restaking them as collateral, it’s crucial to keep a clear record of your transactions. This ensures you have a plan to unlock your funds when needed. Utilize tools like Debank to track your transactions, but consider maintaining a personal spreadsheet for comprehensive records.

Evaluate Which Tokens Are Accepted and How to Get Them

Certain restaking protocols may require specific tokens as restaking deposits. For example, Ether.Fi accepts only wETH, eETH, and weETH (explained below). Ensure you understand how to acquire the necessary tokens for the protocols you are participating in. To avoid bridge fees, verify that these tokens are available (through restaking or trading) on the same Layer 2 blockchain where you intend to restake them.

Now, a few words on the aforementioned tokens:

  • eETH (Ether.Fi ETH): Your “receipt” for staking ETH on ether.fi, representing your share of the growing staking rewards pool.
  • wETH (Wrapped ETH): wrapped in an ERC-20 compatible format, allowing it to be used in Decentralized Finance (DeFi) applications such as decentralized exchanges (DEXes), lending platforms, and yield farming protocols. As the original ETH was created before the common standard used by these applications.
  • weETH (Wrapped Ether.Fi ETH): eETH converted in the same way as ETH to wETH for the same purpose of using it within dApps.

Understand Campaign Details

Before participating in any restaking protocol, it’s essential to understand the campaign details, including:

  • Epochs and Deadlines: Each protocol might have specific periods during which you can withdraw your staked assets without penalties or post-campaign periods when you can claim rewards. Familiarize yourself with these timelines to avoid any unexpected fees or issues.
  • Accepted Tokens: Verify which tokens are accepted as restaking deposits. For example, Ether.Fi accepts only wETH, eETH, and weETH.

Verify the Most Updated Information

To ensure a smooth restaking process, always verify that you have the most up-to-date information by checking the project’s official channels and documentation:

  • Staking Conditions: Check conditions such as the cap for the epoch is filled. Once a cap is reached, additional staking might be restricted or yield lower rewards.
  • Technology Glitches: Expect various glitches since the technology is in its early stages. For instance, restaking positions might not be immediately reflected in the user interface: On Ether.Fi, only Ethereum Mainnet restakes are currently displayed, not those on recently supported L2s like Linea.
  • Page Refreshing and UX Considerations: Due to the evolving nature of these platforms, you might encounter outdated page information. Always refresh the page to ensure you have the latest details, like deposit caps. For instance, on Mitosis, a grayed-out multiplier indicated the deposit cap had been reached, even though the deposit button remained active. It’s crucial to pay attention to these visual cues for accurate information.

Evaluate the Supported L2 Layers

Different Layer 2 (L2) solutions may offer varying multipliers for points and rewards, impacting your staking returns. It’s important to:

  • Check All L2 Chains: Verify which chains are supported. Moving tokens across L2 chains often involves bridges and associated fees unless you already have the tokens on that specific chain.
  • Assess Multipliers: Evaluate the multipliers available on different L2 chains. For example, at Mitosis, restaking on Mainnet had a 1.1 multiplier, while other L2s had a 1.2 multiplier.
  • Assess Available Services: When selecting an L2, prioritize those that offer essential services without requiring bridges. Look for a user-friendly DEX with sufficient liquidity and collateral borrowing options to enhance your restaking experience.

Optimal Acquisition of Liquid Restaking Tokens (LRT)

Determine the most cost-effective method to acquire Liquid Restaking Tokens (LRT):

  • Direct Staking: Compare the benefits of staking ETH directly to obtain LRT.
  • Exchanging ETH: Evaluate the option of exchanging ETH for wrapped versions that might be more suitable for restaking.

Check Bridges and Transaction Fees

When dealing with cross-chain transactions, it’s essential to:

  • Evaluate Bridges: Check the bridges used for cross-chain transactions.
  • Assess Fees: Evaluate the associated transaction fees. Lower fees can maximize your net rewards.

Community Management and Responsiveness

If the details mentioned above have left you feeling confused, a good guiding hand can make a significant difference. An active and responsive community is crucial for navigating the complexities of restaking. Here’s what to look for:

  • Join Project Channels: Join and monitor the project’s Discord or other community channels. These platforms often provide real-time updates and answers to your questions. Joining these communities may involve connecting your wallet and completing a verification process to ensure authenticity.
  • Evaluate Responsiveness: Gauge the responsiveness and activity level of the community management. A responsive team can help clarify doubts, provide support, and ensure you stay informed about any changes or updates.
  • Look for Community Engagement: Active community discussions and engagement can be a sign of a healthy and supportive ecosystem. Engaged users often share valuable insights and tips that can enhance your restaking experience.

Stay Updated on Protocol Changes

To adapt quickly to new rules or opportunities, staying updated on protocol changes is crucial:

  • Stay Connected on Social Media: Follow the platforms you’re engaged with on Twitter and Discord, particularly their official announcement channels, to receive timely updates and notifications.
  • Check for Updates Regularly: Regularly check for updates or changes in the protocols you’re staking with. This ensures you can adapt to new rules or opportunities quickly.

Diversify Your Staking Portfolio

To mitigate risks and increase potential returns, diversifying your staking portfolio is essential. Here’s how you can do it:

  • Spread Assets Across Protocols: Distribute your staked assets across multiple protocols to reduce risk. By not putting all your assets in one protocol, you can minimize potential losses if one protocol experiences issues.
  • Explore New Opportunities: Stay informed about new restaking opportunities, as new platforms and chains often emerge. Diversifying across different platforms and chains can help maximize your returns.

Understand Risks

Being aware of the risks associated with restaking is crucial to avoid unexpected losses. Here are some key points to consider:

  • Audit and Slashing Risks: Understand the risks such as auditing by an unknown vendor and slashing conditions and penalties for the protocols you participate in. Slashing can occur due to various reasons, such as downtime or malicious activity, leading to a loss of staked assets.
  • Early Stage Technology: The technology behind these projects is often in its early stages, therefore occasional glitches may occur. For example, your restaking positions might not be immediately reflected in the user interface, or you might see outdated information.
  • Market and Liquidity Risks: Be mindful of market fluctuations and liquidity issues. Low liquidity can affect your ability to trade tokens efficiently and might result in unfavorable prices.

Conclusion

Restaking offers a valuable opportunity to maximize your rewards within the Ethereum ecosystem, but it comes with its own set of complexities and risks. By following this comprehensive checklist, you can navigate these challenges more effectively, make informed decisions, and optimize your staking strategy.

Remember, the key to successful restaking lies in careful planning, active engagement with the community, and continuous learning.

If you have any advice, corrections, or additional insights, please let me know in the comments. Happy (re)staking!

If you’re new to EigenLayer and want to understand the basics of staking and restaking on this platform, read EigenLayer: A Beginner’s Guide to Enhancing Ethereum Rewards Through Staking and Restaking.

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