Restaking is reusing already-staked collateral to secure additional services beyond the base chain, earning extra fees in exchange for extra slashing exposure. The same capital backs multiple obligations at once, which is both the source of the additional yield and the source of compounded, correlated risk.
A protocol relying on restaking for security is renting its cryptoeconomic guarantees, not owning them. Marketing maximum theoretical yield while burying per-service slashing risk understates the real exposure.
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How it works
Restaking uses collateral already committed to one proof-of-stake network to secure additional services at the same time. A validator whose ETH secures Ethereum can opt into a restaking protocol that allocates that same ETH as collateral backing an oracle, a data availability layer, or any service wanting economic security without bootstrapping its own validator set. The original obligation stays: the ETH still secures Ethereum.
It works through opt-in delegation. Stakers point their position to a restaking marketplace, operators allocate that collateral across one or more services and earn fees for the validation work, and those fees flow back to stakers proportionally. No new capital is created; the same capital backs more security commitments.
Design consequence
Any protocol building a service on restaking is renting its security. That security scales with how much restaked collateral it attracts and keeps, which depends on operators accepting its slashing conditions and stakers accepting the exposure. A slashing condition that is ambiguous, disproportionate, or triggered by operator error rather than genuine misbehavior will repel operators and shrink the security budget.
Common mistake
For stakers and LRT depositors, restaking means a compound risk profile: capital can be slashed by the base chain for consensus failures and by each AVS for service-level failures. If both fire in one incident, the loss can far exceed what any single service's documentation implies. Treating restaking as a pure yield amplifier without modeling correlated loss scenarios is the mistake that harms depositors in a severe event.
See LST and LRT Tokenomics Design for how this applies in practice.
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