What Is Restaking and Why Yields Are Higher

[Chawla Solutions]

Restaking is an emerging DeFi innovation that allows users to reuse already-staked crypto assets—like ETH—to earn additional layers of yield. This strategy enhances capital efficiency, but it comes with increased risk.

How does restaking work?
Let’s say you stake ETH on Ethereum and start earning base rewards from securing the network. Platforms like EigenLayer let you restake that same ETH to support and secure other decentralized protocols—without un-staking it from Ethereum.
EigenLayer rehypothecates (reuses) your staked ETH to provide security for oracles, rollups, bridges, or other middleware. In return, you earn:

• Ethereum staking rewards, and

• Extra incentives or tokens from the secondary protocols you're helping secure.

Why it’s gaining traction:
Restaking represents a new wave of capital efficiency in DeFi. Users can get multiple yield streams from the same locked asset, which is attractive in a low-return environment.

What are the risks?

• If one of the secondary protocols fails or is attacked, your restaked assets can be slashed (partially lost).

• You’re stacking risk across multiple layers, and each added protocol adds potential vulnerabilities.

Key platform:
EigenLayer – the leading protocol enabling ETH restaking on Ethereum.

TL;DR: Restaking lets you earn layered rewards from a single staked asset, but it also compounds your exposure to slashing and protocol risk.