Overview
Restake Finance is a liquid restaking protocol that provides a simplified interface for EigenLayer restaking. Users deposit liquid staking tokens (primarily stETH from Lido) into Restake Finance and receive rstETH, a liquid restaking token that can be used in DeFi while the underlying assets earn restaking yield from EigenLayer's Actively Validated Services (AVS).
The protocol launched as one of the early liquid restaking solutions, aiming to solve the capital inefficiency of native EigenLayer restaking where deposited assets become illiquid. By wrapping restaked positions into a tradable token (rstETH), Restake Finance enables users to maintain liquidity while earning layered yields — base ETH staking rewards from Lido plus additional AVS rewards from EigenLayer.
The RSTK token serves as the governance token, with holders able to vote on protocol parameters including AVS selection strategy, fee structures, and operator delegation. The project is relatively small compared to restaking competitors like Ether.fi, Renzo, and Kelp DAO.
Technology
Restake Finance's architecture is an abstraction layer over EigenLayer. The protocol accepts LST deposits, delegates them to EigenLayer strategies through selected operators, and mints rstETH tokens representing the restaked position. The technical implementation includes:
- Modular Deposit Vault: Accepts multiple LST types and routes them to appropriate EigenLayer strategies
- rstETH Token: Liquid restaking token that accrues value from both staking and restaking yields
- Operator Delegation: Protocol selects and delegates to EigenLayer operators based on performance and security criteria
- Withdrawal Queue: Manages the asynchronous withdrawal process from EigenLayer back to underlying LSTs
The technology is functional but not especially novel — it is primarily a wrapper and routing layer over EigenLayer's existing infrastructure. The value proposition is convenience rather than technical innovation.
Security
Restake Finance inherits the security properties (and risks) of both the underlying LST protocol and EigenLayer. The layered architecture means security depends on multiple protocol layers functioning correctly simultaneously. Smart contracts have been audited, but the composed risk of LST + restaking + Restake Finance's own contracts creates a meaningful attack surface.
EigenLayer slashing risk is the primary concern — if an AVS experiences a slashing event, rstETH holders could lose a portion of their restaked capital. Restake Finance manages this through conservative AVS selection, but the protocol's small team has limited resources for deep AVS due diligence compared to larger competitors.
Decentralization
Restake Finance operates with relatively centralized governance. The core team manages operator selection, AVS strategy, and protocol upgrades. While RSTK governance exists, the small token holder base limits effective decentralization.
Operator delegation is managed by the protocol team rather than a permissionless system. This means users trust Restake Finance to select reliable operators and safe AVS — a reasonable approach for simplicity but a centralization vector.
Adoption
Adoption has been modest. Restake Finance attracted early TVL during the restaking narrative peak but has struggled to compete with larger protocols. Ether.fi (weETH), Renzo (ezETH), and Kelp DAO (rsETH) have all captured significantly more restaking TVL, leveraging larger teams, more marketing resources, and better DeFi integrations.
rstETH has limited DeFi integrations compared to weETH, reducing its utility as a composable DeFi primitive. The protocol's smaller scale creates a negative feedback loop — less TVL means less DeFi integration demand, which means less reason for users to deposit.
Tokenomics
RSTK has a total supply of 100 million tokens. Distribution includes team, investor, and community allocations. The token provides governance rights and a share of protocol fees. Revenue sharing was an early feature, with protocol fees partially distributed to RSTK stakers.
The small protocol scale means revenue shared with RSTK holders is minimal, making the token primarily speculative. The relatively small market cap and low liquidity create volatility. Without significant TVL growth, the token's fundamental value drivers remain weak.
Risk Factors
- Intense competition — Ether.fi, Renzo, Kelp DAO dominate liquid restaking with far more TVL
- Layered risk — composed smart contract risk across LST, EigenLayer, and Restake Finance layers
- Small team — limited resources for security monitoring, AVS diligence, and DeFi integrations
- EigenLayer dependency — entirely dependent on EigenLayer's success and AVS ecosystem maturity
- Slashing exposure — AVS slashing events directly impact rstETH holders
- Liquidity thin — rstETH has limited secondary market depth, creating depeg risk
Conclusion
Restake Finance was an early mover in liquid restaking but has struggled to maintain relevance as larger, better-resourced protocols captured the market. The 4.2 score reflects a functional product solving a real need (liquid restaking access), significantly discounted by small scale, intense competition, and limited differentiation. The protocol's survival depends on either finding a unique niche within the restaking ecosystem or achieving meaningful TVL growth to establish DeFi integration relevance. In a market with strong network effects favoring scale, being a small liquid restaking protocol is a precarious position.