Restaking has been around for a while but it really heated up once Ethereum went to proof of stake over proof of work. The biggest issue with Ethereum moving to this type of system is they required 42 $ETH in order to run a node yourself. This ultimately priced a bunch of people out as the cost of running a node was over $100,000 plus the know how of how to operate one and keep it running online otherwise risk losing it all.

It was a risk and a price point many didn't want to take and felt left out on. But have no fear DeFi came to the rescue... maybe...

There are options in which large cap companies will run the node for you as a shared node with others in which the rewards are the divided out. For example Coinbase allows you to stake your ETH and earn roughly 2.5% yield on it because coinbase takes a bit of a cut of the earnings.

What Is Restaking?

Restaking is a somewhat new field in which allows you to stake your Ethereum tokens into a DeFi style pool. In exchange the defi platform gives you a liquidity token that represents the ETH you staked. You can then take that liquidity token and either hold on to it, sell it or restake it by adding it into defi pools further increasing your APR on the Ethereum.

Instead of earning 2.5% or investing a ton of money into tokens and hardware to run your own node you can now take small or large amounts and restake it often earning a far higher reward than just 2.5%.

This primarily all started with the platform called EigenLayer. But now this concept no longer just applies to Ethereum instead it's starting to spread it's wings into Solana and it has some people on edge.

Solana Restaking

As we all know Solana has had it's fair share of growing pains. With blocks being rejected, transactions failing in droves and meme coins and other trash being launched in droves the network became saturated and hardly able to work.

Some of that has been ironed out now through updates and other features of the blockchain. Which I'm going to say again this is why I consider a blockchain a Business.

The Issues With Restaking

The biggest issue with this restaking option is it's making things even more centralized. Instead of having miners, or node operators you now have a few companies that operate a vast majority of the blockchain that is also centralized and could come under attack of governments, lawsuits etc.

What we can see happening is that there is a need for more decentralized systems something like the Hive blockchain in which more people own and operate the platform instead of a select few.

What are you thoughts on restaking? Do you current use it yourself and if so what blockchains are you most excited about?

Posted Using InLeo Alpha