So you might have heard about Restaking recently and all the narratives around it are getting increasingly complex. So what exactly is Restaking? Let us dive into what all the hype is about!

What is Staking First?

Before we dive into restaking, we need to understand what staking is first! Staking is like locking up your cryptocurrency to help a blockchain work better. You stake coins to

1. Help the network process transactions.

2. It helps keep the network secure.

3. Sometimes you get to vote on decisions as well

And in return for staking your cryptocurrency, you get to earn some rewards (kind of like interest)! For example, if you stake your ETH in Ethereum Blockchain, you lock it to help the Ethereum network run, and you earn more ETH as a reward.

What is Restaking?

So now that you have a brief understanding of what is staking about, let’s talk about what is restaking. Restaking is using the crypto you’ve already staked (or the rewards you’ve earned) to do more things. Instead of just leaving it in one place, you use it again for a second purpose, like earning more rewards. You can think of it like this, let's say you’re lending money to one friend and they don’t need it all at once, they might let you lend the rest to someone else and earn extra interest.

How does Restaking Work?

We can break Restaking into 2 stages, Primary Staking and Secondary Staking

Pros and Cons of Restaking?

Restaking offers some potential pros, such as additional rewards and better capital efficiency. However, it also introduces higher risks, particularly the risk of slashing. Slashing is a penalty mechanism in PoS blockchains that punishes validators for not acting in the network's best interest. In the case of restaking, this risk increases due to the added responsibilities taken on by the staker. Despite these challenges, restaking is gaining attention in the crypto space, with various projects exploring its use or functioning as restaking resource provider. As with any investment decision, everyone should carefully evaluate the risks and potential rewards before participating in restaking.

Which platform can I use for Restaking?

EigenLayer, a platform built on Ethereum, introduces the concept of restaking ETH that has already been staked to operate a Validator node. With restaking, users can unlock additional benefits by receiving liquid assets and restaking rewards. These liquid assets can then be used across various DeFi protocols. While staking has traditionally focused on securing the Ethereum blockchain, restaking with EigenLayer broadens its purpose to include supporting other critical applications like bridges, oracles, and data availability.

EigenLayer also includes slashing risks, penalizing stakers for malicious actions, maintaining a high cost for corruption threats and bolstering blockchain security. A governance layer and cryptoeconomic dashboard effectively manage associated risks.

Step-by-step tutorial on Restaking with EigenLayer

For this tutorial, we will be exploring Liquid Restaking on the EigenLayer Web App.

Step 1: Open the EigenLayer App and connect your Web3 wallet. Visit EigenLayer on the Ethereum Mainnet at app.eigenlayer.xyz.

Step 2: Click Restake.

Step 3: Click on the asset you wish to restake. Choose the the amount of the asset you wish to restake. Click Submit to continue.

If you have not yet delegated your assets to an Operator, you will be prompted to do so at this step. Click on an Operator then click Submit to continue.

Step 4: Token Approval, Deposit, and Delegate transactions:

• If this is your first time depositing a token on EigenLayer, you'll need to Approve token spending before you can restake. Token Approval gives a dApp permission to move the specified token from your wallet.

• If you have not yet delegated assets to an Operator, you will receive two transaction prompts: one for the Deposit transaction and second for the Delegate transaction.

Step 5: Sign the transaction(s) via your Web3 wallet to continue.

Step 6: Observe the confirmation that the Restake operation is completed.

How do I Unstake and Withdraw?

Unstake and Withdraw is easy as well with EigenLayer as well but a gentle reminder that all funds unstaked from EigenLayer will go through an escrow period before being eligible to be fully withdrawn. Check out the resources below to know more about escrow period.

Step 1: Navigate to the token asset you wish to unstake. Click Unstake to continue.

Step 2: Choose the the amount of the asset you wish to restake. Click Submit to continue.

Step 3: Click Confirm to sign the queue withdrawal transaction when prompted by your wallet.

Step 4: Observe the Unstake confirmation page. Your withdrawal is now in escrow. Wait for the escrow period to complete.

Step 5: Once the escrow is completed, you'll see the withdrawable balance under Available to Withdraw. Click Withdraw to complete the withdrawal. Sign the transaction when prompted by your Web3 wallet.

And voila! You have successfully learned to restake and unstaked your ETH!

Conclusion

Alright so in conclusion, restaking is an interesting way to make the most out of your staked crypto by earning rewards from multiple sources. While it offers the potential for more profits, it also comes with some extra risks, like slashing, that need to be considered and always DYOR!

In my opinion, restaking has the potential to change the way we think about staking, making it more useful and rewarding. As the technology develops, I believe it will become a common practice, where it can offer even more opportunities for growth and innovation!

Additionally, here are some resources you can refer to if you would like to learn more!