Ethereum Restaking Is Going A Little Too Far Now?

I often touch base on this subject around Ethereum because I feel it's an important one. My latest article on it titled Massive Things Taking Place For ETH I go over it in more detail.

In general what it is, is the ability to stake your Ethereum tokens with another platform and in exchange get liquid tokens which be be used to mine, stake, defi, trade etc. Giving you much more flexibility then just staking the tokens yourself on your own node.

Now while we are seeing centralization issues with Ethereum I personally don't think they are any different or bigger then when Ethereum was a proof of word token. Major companies have billions to invest in mining hardware which destroys any small mom and pop or every day citizen from mining bitcoin or at the time Ethereum themselves.

So one could argue that this shift of staking tokens with large companies now like Coinbase is much the same thing. But there's a new worry in town on top of this. Restaking... let's dive in.

What Is Ethereum Restaking

Restaking is a new term in which mainly focuses around a newer protocol called EigenLayer. What it does is allows for locked up Ethereum tokens to earn fees and rewards to be restaked to secure and validate other protocols.

So what's the benefit of that you might ask?

The idea is to gather more security and rewards from already staked ETH. Currently ETH pays out roughly 4% APY on it's token. However with those small extra rewards there becomes a major security issue and just false building which will most likely user in more scams and ways to manipulate the system.

It's even been proposed by many higher ups at Ethereum to run a fork of the chain they would crush EigenLayer dreams before they can even happen.

While the general idea might be a good one which is to allow Ethereum to bridge and scale it seems to undermine the core foundations of Ethereum itself opening up new breaches in security. EigenLayer would allow for Staked ETH to be moved to other so called "trusted" bridges that other developers and projects create. In which that restaked token would earn some extra rewards and fees for helping out that bridge.

While the idea does sound great we all know that the general human nature is a selfish and evil one sadly. There are so many bad actors that just ruined it for everyone else and that's a major fear of how EigenLayer would and could be abused.

On top of that risk there's also the risk that Ethereum tokens would become over leverage and now be propped up on possibly "fake" bridges and reward tools. This sharding of the trust layer could also move a lot of the "trust" factor off of Ethereum nodes and on to other areas and people go after more and more rewards to squeeze out every possibility of profit.

So what are you thoughts? Is restaking a major security risk to Ethereum or is it a viable way to expand the Ethereum blockchain to other blockchains?

Posted Using InLeo Alpha