Ether.fi exits restaking as yields vanish and profits drop
Ether.fi abandons restaking model
Ether.fi, one of Ethereum's largest liquid restaking protocols, is ending its core restaking business. By the end of this quarter, the platform will remove its last structural link to EigenLayer, a protocol designed to let staked ETH secure additional services.
The move comes as restaking yields have fallen sharply and concerns about smart-contract risks have grown. Ether.fi CEO Mike Silagadze stated that the decision was driven by a lack of meaningful returns and perceived risks for users.
Key numbers show falling returns
- Less than 1% of ether.fi's assets remain restaked as of August.
- The five largest liquid restaking tokens earned $953,350 in gross profit last quarter, down from $2.18 million three quarters ago.
- Restaking protocols secured $10 billion but generated only $99,977 in fees over a single week.
- In comparison, standard liquid staking secured $51.87 billion and earned $27.35 million in the same period.
- Per dollar secured, regular staking earns roughly 53 times more than restaking.
Why the shift happened
When ether.fi launched in 2024, it automatically restaked user deposits on EigenLayer. The goal was to allow ETH to earn yield twice: once for securing Ethereum and again for securing other services like oracles. However, the services buying this security did not pay enough to cover the base yield plus a premium.
In August, ether.fi removed restaking functionality from its main token, weETH, turning it into a standard liquid staking token. Users who still want restaking exposure must now opt into a separate token built on Symbiotic, a competing platform.
Profit margins tighten across the sector
Data from DefiLlama shows that while restaking categories held $10.02 billion in value on September 8, fee generation remained minimal. Meanwhile, the broader liquid staking sector continued to generate significantly higher revenue per dollar locked.
EigenLayer saw its total value locked reach $19.7 billion at its peak. Liquid restaking tokens also surged over 1,000% in the first six weeks of 2024 before the expected secondary yields failed to materialize.
What lies ahead for ether.fi
Ether.fi plans to fully withdraw EigenPod withdrawal credentials by the end of the year. The company is shifting focus away from restaking and toward building a crypto neobank instead.
Sources
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