DeFi · 57 / 86 · 2 min
Liquid staking and restaking
Liquid staking gives you a receipt for coins you staked with a provider. Restaking takes that receipt and pledges it again. Each layer is another way the money can fail.
The receipt is not the coin. Restaking pledges the receipt again.
A worked case
Someone holds a liquid staking token and uses it as collateral, then restakes the claim. A slashing event hits the stake underneath. The receipt, the loan, and the restaked pledge all feel it. They thought they held three assets. They held one coin, promised three times.
The receipt
You do not hold the staked coins directly. You hold a token that claims them. The provider can be slashed, hacked, or simply big enough to matter to the whole chain.
Stacked again
Restaking uses the same security for extra jobs. Extra jobs mean extra ways to lose the stake. The receipt's receipt is not the original coin.
A point or an airdrop for restaking is often the only reason the extra risk felt worth it. Points are not the coin.
One coin, promised again
Liquid staking gives you a receipt for coins you staked with a provider. Lido's stETH is the large Ethereum example. The receipt trades. It is not the ether, and it can trade below the ether when the withdrawal queue is long or when the market is scared, which it did in June 2022 around the broader collapse. Restaking, the next layer, takes that receipt and pledges it again to secure other systems. Each pledge is another way the same coin can be slashed, delayed, or treated as collateral.
The appeal is that you earn a staking yield and still have a token you can lend or sell. The cost is that you now depend on the staking provider, the receipt's market, the protocol that accepts the receipt as collateral, and, if you restaked, every service downstream. A problem in the bottom coin is felt in all of the paperwork above it.
Name the layers before you count them as separate savings. Three tokens that unwind into one ether are one pile, with three sets of rules.
Read it yourself
These links are the record. They are not a recommendation, and they are not instructions. A news story or a court paper can still be wrong about a detail. The check does not change because a famous name is in the story.
Apply the check
Open a question. The line is about this topic. It is not a verdict that anything is safe.
The staking provider, the lender, and the restaking protocol.
Each of those contracts, and the validator set underneath.
Slashing, a depeg of the receipt, or a withdrawal queue.
Check yourself
Is a liquid staking token the same as the coin you staked?
No. It is a claim on a provider, with extra failure modes.
After this you can count the layers between you and the original coin.