Restaking ETH with stETH and rETH on EigenLayer

Manual delegation via EigenLayer

Manual delegation via EigenLayer is the best way to maintain control over AVS selection. EigenLayer controls 93.9% of the restaking market with 4.3 million ETH restaked. As of February 2026, the protocol holds over $15 billion in total value locked. Restakers can delegate their Lido stETH or Rocket Pool rETH to an EigenLayer operator to secure Actively Validated Services. This process provides extra yield.

Direct restaking requires manual research into operators. Lido stETH rebases daily, which creates ordinary income every day. Rocket Pool rETH increases in value against ETH instead. This difference changes the tax basis. stETH typically maintains a price within 1% to 2% of ETH, but market stress can cause price depegging.

Operators run validation for AVS protocols using delegated stake as collateral. Each AVS pays rewards to the operators and restakers. Users pick an operator and select an AVS. Operators receive 10% of the rewards. Slashing risk is real because a mistake by an operator on any AVS can cost a portion of the stake. The protocol activated slashing on the mainnet on April 17, 2025. Flagship AVS projects like EigenDA, EigenAI, and EigenCompute provide the infrastructure for these services.

Yield and risk profiles

Returns vary by AVS.

Yield depends on which AVS protocols users choose to secure. Some strategies yield 4.85% on Coinbase for EIGEN staking, while aggressive strategies using multiple AVS and points farming can reach 7% to 10%. Slashing can be aggressive, with some AVS taking 100% of funds for serious violations. The UI shows a 7-day averaged APR, but a 2-day calculation delay exists. AVS rewards are driven by supply and demand for security.

Smart contract risk multiplies because funds interact with EigenLayer, AVS, and potentially liquid restaking protocol contracts. The Kelp exploit in April 2026 through a LayerZero bridge demonstrated how bridge dependencies create failure points. AVS rewards can be paid in ETH or other ERC-20 tokens like USDC.

Using liquid restaking tokens

Liquid restaking tokens, which you can use to avoid manual management, handle operator selection and AVS management for the user. Protocols like Ether.fi, Renzo, and Kelp DAO manage these complexities. Ether.fi holds over $2.8 billion in total value locked.

Deposit ETH into an LRT protocol to receive a liquid token such as eETH or weETH. Renzo uses an algorithmic, hands-off model. Kelp DAO focuses on multi-chain availability. Rewards accrue automatically.

The decision to use an LRT depends on whether the extra 1% to 3% APY justifies the extra protocol layer and the fees that these liquid restaking protocols charge for their automated management. Can users maintain liquidity during a major market event?

The 7-day escrow period for EigenPods provides a security buffer. High earners must account for the 3.8% Net Investment Income Tax on rebase income from tokens like stETH. The 10-day timelock for parameter changes follows the multisignature governance process. Withdrawals via Lido follow the Ethereum protocol queue and take several days. Stakers can swap stETH instantly on exchanges to avoid these delays.