Restaking’s Yield Promise Faces Growing Scrutiny

[madmax]

Restaking is often promoted as a breakthrough for DeFi yields, but critics argue the model introduces more risk than reward. By allowing already-staked assets, typically Ether, to secure multiple protocols at once, restaking stacks responsibilities and slashing exposure on the same collateral.

While the approach appears efficient, analysts say it functions more like leverage than innovation. A failure or governance issue in any downstream protocol can cascade upward, potentially wiping out validator collateral. This risk compounds as validators restake into multiple systems.

Concerns are also mounting over centralization, as only large operators can manage the complexity, leaving much of the sector’s $21 billion in locked value concentrated among a small group of whales and venture firms.

[etfs]

feels like restaking is cool on paper but way too fragile for the average user to touch safely