Popular cryptocurrency exchange Kraken has announced the introduction of Ethereum re-staking via EigenLayer, allowing users who have already staked ETH to leverage it through smart contracts.
This new feature allows ETH token holders to use their staked ETH (Ether that is already staked to secure the Ethereum network's proof-of-stake mechanism) to build on EigenLayer. By securing your decentralized applications, you have the potential to earn additional staking rewards.
Staked, a subsidiary of leading EigenLayer operator Kraken, will become a validator for restaked ETH using Kraken, providing a service normally only available to the company's institutional customers.
Restaking on EigenLayer allows investors to further contribute to the security of decentralized applications built on Ethereum, known as “Actively Validated Services (AVS).” By doing so, investors will be able to earn additional rewards on top of their regular Ethereum staking rewards.
Kraken details in its blog post that hat rewards will be paid in AVS tokens, which represent the decentralized applications that restaked ETH helps secure, including “sidechains, data availability layers, etc.” , oracles, bridges, etc.”
In addition to that, re-staking ETH has a minimum 7-day escrow period that is added to the unlimited period required to unstake assets on the Ethereum blockchain, and re-staking will result in a user's ETH Some availability will be lost.
ETH re-staking adds some additional risks to simple ETH staking, including smart contract risks because more smart contracts are involved in the operation, and potential flaws, bugs, and or add any backdoors that may exist, Kraken said.
Additionally, the additional conditions imposed by each AVS may mean that restaked funds face significant reductions in fees, resulting in potential losses, while the addition of other third parties Counterparty risk increases.
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