Ethereum Restaking: How EigenLayer Works?

Ethereum switched from proof of work to proof of stake in 2022. This gave people a way to earn rewards by staking their ETH and helping to secure the network. Now a new idea is taking this even further: restaking. At the center of this idea is EigenLayer.

What is Restaking?

Imagine you lend your friend some money and they use it to build a shop. Later, another person asks if they can also use your money to set up a food stall next to the shop. You are not giving more money, but the same money is now securing two businesses.

That is what restaking does. You stake ETH to secure Ethereum. With EigenLayer, you can use the same ETH again to secure other services like oracles, data layers, or bridges. In return, you earn extra rewards.

How Does EigenLayer Work?

EigenLayer is like a marketplace. Stakers bring their ETH. New projects come in and ask for security. Validators connect the two sides.

There are two main ways to restake:

1. Native Restaking – If you are already running an Ethereum validator, you can point your staked ETH toward EigenLayer.

2. Liquid Restaking – If you use a liquid staking token like stETH or rETH, you can deposit that into EigenLayer.

Why Is This Powerful?

For stakers, you can earn more rewards without adding more ETH. For projects, you do not need to build your own security system. You borrow Ethereum’s security.

For example:

• A new blockchain wants to store data. Instead of creating 1000 validators from scratch, it uses EigenLayer.

• The stakers who join get paid by this new blockchain on top of their normal Ethereum rewards.

The Growth of EigenLayer

In just a few months, the total value locked in EigenLayer went from a few hundred million dollars to more than 18 billion dollars. This shows how much interest stakers and projects have in the idea.

Risks to Keep in Mind

Restaking is not risk free. If a project fails or misbehaves, your restaked ETH can be slashed, which means you lose some of it. Also, when the same ETH is used many times, the whole system can become fragile, like dominoes falling if one piece breaks.

Conclusion

EigenLayer is opening a new chapter for Ethereum. It lets ETH stakers do more with the same tokens. It also helps new projects grow faster by borrowing Ethereum’s security.

It is an exciting step forward, but like all new ideas in crypto, it comes with risks. If restaking succeeds, it could make Ethereum even more powerful as the trust layer of the internet.