The Restaking Liquidity Spiral

How EigenLayer Became DeFi’s Yield Black Hole

📌 TL;DR

• EigenLayer restaking has transformed Ethereum’s staking layer into a modular, monetizable trust market

• Capital is looped and stacked across LSTs → AVSs → LRTs → wrappers → new chains

• This spiral has triggered an explosion of recursive yield, airdrop farming, and meta-governance games

• But it also brings risks: slashing contagion, rehypothecation collapse, and governance wars

• This is the deep dive on how EigenLayer is redefining DeFi capital routing in 2025

🎯 1. Hook — Yield No Longer Flows. It Spirals.

In 2021, you farmed tokens.
In 2023, you staked ETH.
In 2025, you restake trust itself.

EigenLayer enables Ethereum stakers to “restake” their ETH or LSTs and offer modular security to other protocols — called AVSs.

🔍 2. What Is Restaking? Simplified

Restaking = reusing staked ETH (or LSTs like stETH, eETH, etc.) to secure additional services beyond Ethereum’s consensus layer.

Flow:

• Stake ETH → receive LST (e.g., stETH)

• Restake LST on EigenLayer

• Delegate to AVSs (Actively Validated Services)

• Receive points, yield, AVS tokens

• Loop through LRTs or DeFi vaults

Restaking unlocks a new capital surface area — turning ETH into yield-bearing trust collateral.

🔁 3. The Restaking Liquidity Spiral

This isn’t a one-way yield stream — it’s a feedback loop:

1. Stake ETH → mint LST (e.g., eETH, rsETH)

2. Restake → earn EigenLayer points

3. Delegate to AVSs → earn AVS tokens

4. Loop through LRT vaults → farm wrappers (EigenPie, Renzo)

5. Reuse yield + airdrops as LP collateral or leverage → repeat

🧠 Yield-on-yield → spiral economics → restaking flywheel

🌐 4. Key Players in the Restaking Meta

🔷 AVSs (Actively Validated Services)

🔷 LRT Protocols (Liquid Restaking Tokens)

🔷 Wrappers / Aggregators

• EigenPie: Restaking basket vaults

• Symbiotic: Modular rehypothecation engine

• RestakeFi: AVS rebalancing automation

🧠 5. Risks in the Restaking Spiral

🧨 Slashing Contagion

• One bad AVS = cascading slashing across LSTs, LRTs, wrappers

• Risk multipliers increase with layers of delegation

🔗 Rehypothecation Collapse

• If LSTs depeg or AVS token fails, entire stack may unwind

• Leverage + yield farming = systemic instability

⚖️ Governance Collisions

• LRTs and AVSs have overlapping control incentives

• Competing protocols may try to capture Eigen governance

🧠 6. Positioning Guide: How to Farm the Spiral

📈 High-Conviction Plays:

• eETH and ezETH (for Eigen native alignment + AVS access)

• Brevis and Espresso (most active airdrop potential)

• EigenPie + RestakeFi (for exposure to many AVSs at once)

🔧 Tools to Use:

• EigenLayer UI (for delegation)

• Re7 dashboards (TVL / restake flows)

• Dune: EigenLayer AVS performance

• Kelp/EtherFi points trackers

⚙️ Strategy:

• Stake → mint LST → restake → delegate → vault → LP → claim AVS

• Farm AVS airdrops early, but watch restake saturation

• Monitor validator queue bottlenecks + slashing disclosures

📰 Today’s Top Crypto News (June 13, 2025)

🔹 EigenLayer’s Funds Redistribution Upgrade Set for June Mainnet
EigenLayer's major upgrade in June 2025 reshapes the penalty system with a focus on blockchain scalability and security, involving the redistribution of forfeited funds.

🔹 Brevis Secures $7.5M in Seed Funding to Revolutionize Future of Verifiable Computing
Brevis has announced that it has raised $7.5 million in seed funding, with Polychain Capital and Binance Labs leading the effort.

🔹 Espresso Systems Secures $28 Million in Series B Funding Led by a16z Crypto
Espresso Systems recently secured $28 million in a Series B funding round, aiming to bolster Ethereum's Layer 2 solutions.

🔹 Renzo, the $4B Liquid Restaking Protocol, Raises $17M to Expand Restaking Services
With Renzo’s ezETH—the most integrated Liquid Restaking Token (LRT)—users can access broad exposure to the EigenLayer (and Ethereum) ecosystems with more opportunities to generate rewards.

🔚 Conclusion — Restaking Is the New Monetary Layer

EigenLayer has created trust derivatives:

• ETH = principal

• Restaking = yield protocol

• AVSs = income streams

• Wrappers = capital efficiency layers

🧠 Up Next (June 14):

Pre-Restaked Tokens: Speculating on AVS Tokens Before They Exist