Overview
Ether.fi is a decentralized, non-custodial liquid staking protocol built on Ethereum. Its core innovation is that stakers retain ownership of their validator keys rather than handing them to the protocol — a meaningful distinction from Lido, where node operators control the keys. Users deposit ETH and receive eETH (or its wrapped version weETH), a liquid staking token that can be used across DeFi.
The protocol has strategically positioned itself at the intersection of liquid staking and restaking. Ether.fi natively integrates with EigenLayer, meaning deposited ETH is automatically restaked to earn additional yield from Actively Validated Services (AVS). This dual yield proposition — base ETH staking rewards plus restaking rewards — has driven substantial TVL growth, making Ether.fi one of the largest restaking protocols.
Founded by Mike Silagadze, the project launched its ETHFI governance token in early 2024 through an airdrop to early depositors. Ether.fi has expanded beyond staking with the launch of Cash, a crypto-native payment card backed by DeFi yields.
Technology
Ether.fi's technical architecture centers on the non-custodial key management model. When a user deposits 32 ETH (or contributes to a staking pool), the protocol creates a validator where the staker holds the withdrawal credentials via a unique NFT representing their stake position. Node operators hold the validator keys for block production but cannot access the underlying ETH.
Key technical components include:
- Staking NFTs: Each 32 ETH stake is represented by an NFT containing withdrawal credentials, enabling ownership tracking and transferability
- eETH/weETH: Liquid staking tokens where eETH is rebasing and weETH is value-accruing, providing flexibility for different DeFi integrations
- EigenLayer Integration: Native restaking where deposited ETH is simultaneously staked on Ethereum and restaked on EigenLayer AVS
- Operation Solo Staker: Program enabling home validators to run nodes through Ether.fi, enhancing geographic and operator diversity
The architecture is well-designed and the non-custodial model is a genuine technical and philosophical differentiation.
Security
Ether.fi's non-custodial design provides stronger security guarantees than custodial alternatives — because stakers retain withdrawal credentials, the protocol cannot unilaterally access funds. Smart contracts have been audited by multiple firms including Certik and Omniscia.
The restaking layer adds complexity and risk. EigenLayer slashing conditions mean that restaked ETH faces additional slashing risk from AVS misbehavior, beyond standard Ethereum validator slashing. If an AVS that Ether.fi delegates to experiences a slashing event, depositors could lose funds. The protocol manages this risk through conservative AVS selection.
Decentralization
Ether.fi scores well on decentralization relative to peers. The non-custodial key model means the protocol never has unilateral control over staked ETH. The Operation Solo Staker program actively recruits home validators, diversifying the node operator set geographically and organizationally.
The node operator set is permissioned but growing, with professional operators and solo stakers participating. Governance through the ETHFI token is active, with proposals on fee structures, AVS selection, and treasury allocation. The protocol is more decentralized than centralized LSTs (cbETH, mETH) and comparable to Lido in governance, with a better story on key ownership.
Adoption
Ether.fi has achieved remarkable adoption, growing to become one of the top three liquid staking protocols by TVL. The growth was significantly accelerated by the restaking narrative and EigenLayer points farming. weETH has become one of the most widely integrated LSTs in DeFi, accepted as collateral across major lending protocols (Aave, Morpho) and supported in numerous liquidity pools.
The ETHFI airdrop drove initial attention, and the continued restaking yield proposition has maintained deposits. The protocol's TVL has shown resilience compared to purely points-driven protocols, suggesting genuine utility beyond speculation. The Cash product represents expansion into consumer-facing crypto products.
Tokenomics
ETHFI serves as the governance token with a total supply of 1 billion. Distribution included an airdrop to early depositors, team/investor allocations, and ecosystem incentives. The token provides governance over protocol parameters, fee structures, and treasury deployment.
Revenue accrual to ETHFI holders is still developing. The protocol generates fees from staking commissions and restaking yield, but the mechanism for distributing value to token holders (beyond governance rights) is evolving. The relatively high fully diluted valuation relative to protocol revenue has been a point of concern for some investors.
Risk Factors
- Restaking risk — EigenLayer slashing events could affect depositor ETH
- Points-driven TVL — significant deposits motivated by restaking points rather than organic demand
- Token valuation — FDV is high relative to current protocol revenue
- AVS dependency — restaking yield depends on EigenLayer AVS ecosystem maturity
- Smart contract complexity — multi-layered staking and restaking architecture increases surface area
- Competitive pressure — Lido, Rocket Pool, and other restaking protocols compete intensely
Conclusion
Ether.fi has carved a strong position in the liquid staking market through genuine technical differentiation (non-custodial keys) and strategic positioning in the restaking narrative. The 6.3 score reflects substantial adoption, strong technology, and meaningful decentralization, tempered by the immaturity of restaking economics and the gap between FDV and current revenue. If EigenLayer's restaking ecosystem matures and AVS fees become significant, Ether.fi is well-positioned to capture that value. The non-custodial model provides a durable competitive advantage regardless of market conditions.