Restaking could introduce ‘hidden risks’ to Ethereum — Coinbase

Ethereum restaking will form a “core part” of the network in the future — but there are still risks that come along with the new yield-bearing mechanism, say Coinbase analysts.

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Ethereum restaking could form the “bedrock” for a wide range of new decentralized applications on the blockchain, but it could also introduce several new hidden risks, says Coinbase. 

In an April 2 research report, Coinbase analysts David Han and David Duong noted several risks with restaking and the issuance of so-called liquid restaking tokens (LRTs).

Ethereum restaking protocol Eigenlayer allows users to earn extra rewards — LRTs — by securing actively validated services (AVS) by staking derivative tokens, which are given to those who have already staked Ether (ETH) through liquid staking protocols such as Lido (LDO).

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