Restaking is an emerging concept that has quickly become a central theme in the current crypto cycle. However, this concept is not new; the earliest example of restaking can be traced back to Polkadot’s Parachain system. Each Parachain can have its own specific use case, governance model, and tokens, but they all benefit from Polkadot’s shared security model, meaning they don’t need to secure their own networks. Instead, they rely on the Relay Chain for security, allowing the stake on Polkadot to secure other chains.
This concept has also been adopted by Cosmos through Interchain Security. The concept of Replicated Security involves one blockchain serving as a security provider for other blockchains. The blockchain that provides security is referred to as the Provider Chain, while the blockchains inheriting the full security and decentralization of the Provider Chain are called Consumer Chains.
More recently, the concept has been brought to Ethereum via EigenLayer, and projects like Symbiotic and Karak have also emerged, actively competing within Ethereum's ecosystem. On Cosmos and Polkadot, restaking is embedded directly within the protocol, in contrast on Ethereum, restaking is facilitated via smart contracts, creating a more open market where restaking marketplaces can operate independently. Here, the idea is to use ETH, ETH LSTs, or ERC20s to secure other networks, known as Actively Validated Services (AVS), in order to earn additional yield while accepting additional risks, such as slashing (which would come in the future). With Ethereum’s rollup-centric roadmap and the growth of Layer 2s, liquidity and dApps are increasingly shifting away from Ethereum Layer 1 to L2s. As a result, the core value proposition of Ethereum Layer 1 will become its economic security and large market capitalization. EigenLayer, along with other restaking marketplaces like Symbiotic and Karak, capitalizes on this by offering economic security to Ethereum-aligned external networks.
In this paper, we will provide an overview of the restaking market on Ethereum as it stands today, explore its business model and economics, and discuss the future of the restaking landscape and its challenges.
In the Ethereum restaking space, 3 prominent platforms have emerged: EigenLayer, Symbiotic, and Karak. EigenLayer has taken the lead as the first restaking marketplace to launch on Ethereum Mainnet and continues to dominate in terms of Total Value Locked (TVL), with over 4.17 million ETH equivalent.
On June 19, 2024, EigenLayer reached its peak TVL, hitting an all-time high of 5.43 million ETH equivalent before experiencing a slight decline.
Symbiotic began accepting deposits on June 11, 2024, quickly reaching its initial deposit cap of 41,290 wstETH in just 5 hours. A second cap of 210,600 wstETH was set on July 3, 2024, and was also reached within 4 hours. The last cap was introduced on August 14, 2024, coinciding with the launch of BTC deposits. These different deposit caps are clearly visible in the graph below.
Currently, Symbiotic has approximately 644,000 ETH equivalent deposited on its platform.
Note: Symbiotic has not yet launched its mainnet, users can only deposit funds at this stage.
Karak successfully launched its mainnet on October 18, 2024, marking a significant milestone for the platform. However, the protocol has attracted slightly fewer deposits compared to both EigenLayer and Symbiotic, with around 205,000 ETH equivalent deposited.
In this competitive market, despite the emergence of new platforms, EigenLayer remains the clear leader, holding approximately 6x more TVL than Symbiotic and 20x more than Karak.
A significant portion of EigenLayer's TVL is driven by Liquid Restaking Protocols (LRTs). Our analysis of the major LRTs on EigenLayer shows that they currently account for approximately 75.37% of the platform's TVL, with an all-time high of 75.46% in July 2024. This indicates that more than 75% of the TVL in EigenLayer comes from users interacting with Liquid Restaking protocols rather than directly through the EigenLayer application.
The protocols included in our analysis are EtherFi, Renzo, Puffer Finance, Kelp DAO, Swell, and Bedrock.
When examining the composition of each LRT, we can see that EtherFi is the largest LRT contributor on EigenLayer, followed by Renzo and Puffer.
There are several reasons why LRTs have become the primary liquidity source for EigenLayer and restaking platforms in general:
Looking at Symbiotic, a similar pattern emerges, with approximately 61.61% of the TVL coming from Mellow vaults and EtherFi. This highlights that a large portion of liquidity is funneled through external protocols rather than directly through Symbiotic itself.
Only about 38.39% of the total TVL has been deposited directly via the native Symbiotic app.
For Karak, the situation is a bit different. It appears that there is only one major LRT on Karak, which is EtherFi with around 17% of the TVL, while 83% of the Karak TVL has been deposited on the native app.
Let’s dive into recent movements in the restaking space. A quick look at the inflows and outflows between EigenLayer and Symbiotic suggests that large inflows into Symbiotic correspond with outflows from EigenLayer.
Based on a recent analysis from Gauntlet, covering the period from June to September 2024, approximately 1,011,000 ETH was withdrawn from EigenLayer during this time. Of this, around 170,000 ETH was moved directly to Symbiotic. However, users didn’t just transfer this amount, they added another 37,000 ETH on top, making a total of 207,000 ETH deposited into Symbiotic.
The 207,000 ETH deposited into Symbiotic accounts for about 42.20% of the 488,000 ETH locked in Symbiotic at that time, meaning that approximately 42.20% of Symbiotic's TVL came directly from withdrawals on EigenLayer.
However, it’s important to note that only 16.5% of the ETH withdrawn from EigenLayer has remained within the restaking ecosystem, while the other 83.5% has exited the market entirely for now.
EigenLayer and Symbiotic flows, Source: Gauntlet
Restaking is supposed to allow networks, commonly known as Actively Validated Services (AVSs) in the restaking ecosystem, to quickly bootstrap a validator set and get a certain level of economic security with minimal time investment.
In this model, platforms like EigenLayer, Symbiotic, and Karak act as marketplaces where restakers, operators, and AVS entities come together. However, their goals are not the same. Here’s a breakdown:
At this point in the market, very few AVSs have clearly defined how much economic security they need or how much they are willing to offer to attract operators and restakers.
Who is restaking meant for?
Restaking has not yet found a clear product-market fit. It isn’t particularly suited for high-value, high-FDV networks, as these networks are large enough to offer large incentives, manage their own validator sets, and provide additional utility for their native tokens (for example, staking the native token to earn a staking yield, rather than paying restakers who hold a different token). It’s difficult to imagine large networks like Monad or others using restaking.
That said, restaking seems more suitable for small to medium-sized projects that don’t yet have the resources to bootstrap a totally sovereign network. Restaking allows them to grow, mature and find product-market fit before being totally sovereign without relying on 'rent' payments to holders of other tokens. However, there are also some AVSs that use restaking for very specific purposes and are not intended to be sovereign, as they bring services and value to the underlying Layer 1.
EigenDA stands out as the first AVS to distribute yield to both restakers and operators. Currently secured by around $10 billion in economic security, it has become a significant player in the emerging restaking ecosystem. However, the economics of maintaining such a network pose several challenges and require a closer examination.
Yield Distribution and Economic Security
EigenDA currently offers 10 ETH per month in rewards to restakers and operators. With a TVL used for economic security of around $10 billion, the total annual amount distributed to operators and restakers corresponds to $300,000 assuming the price of ETH at $2,500. Assuming an economic security of $10 billion, this represents a gross APR of just 0.003%.
This low yield highlights a key challenge in the restaking model: balancing the need for economic security with adequate incentives for participants.
The Cost of Running an AVS
The cost of operating an AVS varies based on the specific infrastructure and requirements needed for it, but on average, we estimate the monthly infrastructure cost to run at around $400 per AVS. Over the course of a year, this represents approximately $4,800 for a single AVS. With 18 AVSs currently in the market, the annual cost for one operator to run all of them comes to $86,400. It’s important to note that this figure does not account for additional expenses such as the salaries of the DevOps teams required to maintain and secure the infrastructure.
EigenLayer currently has 340 operators running at least one AVS each. If an AVS wants to fully leverage the economic security provided by EigenLayer while ensuring that operators cover their infrastructure costs, the financial commitment grows significantly. The formula is simple:
• $400 per month per operator
• 340 operators
This results in a total annual infrastructure cost of $1.63 million. And that’s just for maintaining the infrastructure by 340 operators, it doesn’t include the incentives that need to be paid to restakers.
Cost for an AVS to cover infrastructure costs
EigenLayer has introduced programmatic incentives to maintain its TVL on the platform. You can track the yield from these incentives here. EigenLayer is distributing 16,736,467 EIGEN to Eigen restakers and operators over one year, and 50,209,400 EIGEN to ETH and ETH LST restakers. This not only supports the restaking economy but also helps AVSs to take the time to find ways to incentivize operators and restakers.
In most cases with restaking, AVSs that aren’t yet generating revenue will likely introduce a native token to incentivize restakers. This means they will use their native token to compensate ETH restakers or other ERC20 restakers. As a result, restakers who may simply prefer their rewards in ETH or a specific ERC20 token, are likely to automatically convert these AVS rewards back into their preferred tokens.
Economically, this model is fundamentally weaker than a traditional Proof of Stake system. In traditional staking, participants buy the native token, show commitment to the project, and stake to earn rewards. Since they’ve invested in the native token, they are more likely to hold onto their staking rewards longer than restakers who receive AVS rewards.
In today’s restaking market, there are also auto-compounding products that automatically convert restaking rewards into ETH to boost the restaked position, which encourages immediate selling of AVS tokens.
As slashing goes live, we expect restakers to pay closer attention to the operators they select, particularly the quality of services offered. Additionally, TVL growth will likely be driven by operators’ ability to deliver the best risk-adjusted returns.
Marketplaces are expected to become more flexible, with leading AVSs establishing caps on the amount of security they require or incentivize. The evolution of TVL numbers for AVSs is likely to change as soon as the activation of slashing and yield mechanisms will encourage each AVS to set limits on the TVL they incentivize. This implies that delegations to each AVS will be limited, or yields will be diluted, as AVSs aim to avoid paying for excess security they don’t need.
The introduction of a new security model that distinguishes between "unique" and "total" stake will reshape distribution.
We anticipate different methods by which AVSs will compensate operators for providing security:
At this stage, we believe the leading node operators will benefit in two key ways:
This change in economic conditions could impact major Liquid Restaking Protocols. They attracted substantial liquidity thanks to their own incentives in native tokens, but they now have billions in economic security to provide to AVSs, which, on the other hand, will be difficult to incentivize given the high amount to incentivize for the AVSs. What we see is the following:
To be sustainable, the best LRTs must offer at least the Ethereum staking yield and compete directly with Liquid Staking Tokens (LSTs). This is why many LRT protocols accept native ETH (such as EtherFi, Renzo, Swell, etc.). Even if the restaking yield isn’t significant, users still gain exposure to an LST+ protocol, meaning they receive the benefits of liquid staking as a baseline, with potential upside if the restaking yield becomes attractive.
The Ethereum restaking ecosystem has unlocked new possibilities, enabling small to medium-sized projects to leverage Ethereum’s economic security. While restaking offers significant advantages, its current economic model and design face some challenges. As Ethereum restaking continues to evolve to address these issues, we can expect increased collaboration between AVSs and leading operators, fostering a stronger and more sustainable ecosystem for restakers.
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
The TON blockchain has emerged as a promising platform, but for institutions (wallets, exchanges, custodians etc.) looking to offer Toncoin staking to their customers, current options come with serious limitations. From high staking minimums to complex pool management, existing solutions fall short of meeting the needs of large-scale, flexible staking.
Recognizing this gap, we have launched TON Pool – a staking solution designed to meet the unique requirements of institutional players while making Toncoin staking simpler, more efficient, and scalable.
The TON ecosystem currently offers the Nominator Pool and Single Nominator contracts as staking options. However, both models restrict the number of delegators and impose high minimum stake requirements, which limits accessibility for larger institutions that manage staking services for numerous clients. These limitations force institutions to distribute stakes manually across multiple pools, adding operational complexity and increasing transaction fees, while impacting the final yield. (We covered the current TON staking mechanisms in detail here.)
With these pain points in mind, we saw an opportunity to create a tailored solution that eliminates these barriers and optimizes staking for our customers needs.
TON Pool addresses the shortcomings of current models by providing a flexible, high-efficiency staking solution that scales for larger institutions and various service providers. TON Pool aggregates Toncoin from an unlimited number of users into a single pool, offering seamless in-protocol distribution across multiple validators and removing the need for complex management. The result? A more streamlined, cost-effective, and yield-optimized staking experience for institutions and their customers.
TON Pool is designed for:
One of the most significant advantages of TON Pool is its streamlined staking flow. Here’s a comparison of how staking works with traditional models versus TON Pool:
With TON Pool, customers no longer need to juggle multiple addresses or pay per transaction. Instead, they delegate once, paying a single fee, while all technical complexities are managed seamlessly within the protocol.
“TON Pool is our answer to the challenges institutions face when staking on the TON blockchain. We built this solution to remove unnecessary steps, lower costs, and provide a scalable option for institutions that require a higher degree of flexibility. TON Pool makes staking more accessible and profitable, which we believe is essential to driving the TON ecosystem forward,” - Brian Fabian Crain, CEO, Chorus One.
For more details about TON Pool and to get exclusive discounted commission rates, reach out at staking@chorus.one, and sign up now to be among the first to experience streamlined, scalable Toncoin staking.
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
Our latest episode welcomes Bo Du, Founder of Polymer Labs! 🔥
In this episode of the Chorus One Podcast, hosted by our Research Analyst, Kam Benbrik, Bo shares his journey from Web 2.0 to DeFi and discusses the mission of Polymer Labs in enhancing blockchain interoperability.
Key topics include the intricacies of rollup mechanisms (OP stack vs. Arbitrum), the importance and challenges of blockchain interoperability, and Polymer's integration with the Cosmos ecosystem. Bo also explores the future of scalable infrastructure, the trade-offs in decentralizing sequencers, the economic implications of ZK technology, and the incentivization of relayers in the IBC ecosystem.
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About Chorus One
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
In the context of Ethereum and Proof-of-Stake (PoS) networks, the Annual Percentage Rate (APR) is often presented as a clear and accessible measure of validator performance. As a summary statistic, APR seeks to answer a straightforward question: If I stake 32 ETH today, how much can I expect to have after one year?
However, APR is fundamentally an oversimplification of a highly complex system. Its role as both a measure of past returns and a forecasting tool obscures the intricate dynamics that govern validator rewards on Ethereum.
For example, using APR to predict future returns is like:
- > Using a small sample of stocks from the S&P 500 to estimate the average yearly return —similar to how APR behaves for small validators.
-> Using just 1-2 years of S&P 500 data to forecast long-term returns —similar to relying on short-term APR data like 7-day or 30-day rates.
This article aims to unpack the underlying biases of APR, explore the stochastic nature of validator rewards, and propose alternative metrics that offer a more accurate assessment of node operator performance—metrics which align more closely with operational realities. Finally, we will examine how Chorus One’s approach, incorporating our proprietary MEV-boost fork, Adagio, captures a more refined understanding of Ethereum staking dynamics. By optimizing the interaction with Ethereum’s proposer-builder separation, Adagio allows us to consistently improve validator efficiency, resulting in tangible improvements in performance without relying on the variability of APR metrics.
Ethereum validators are compensated through two primary reward streams:
While the attestation process is deterministic, rewards from block proposals and MEV are inherently probabilistic. This variability introduces a fundamental challenge: APR assumes a uniform distribution of rewards across validators, which is far from reality. The skewed nature of the reward distribution makes APR a poor proxy for expected returns, especially over shorter time horizons.
The central flaw in using APR as a measure of validator performance lies in its failure to account for the randomness that defines much of the reward structure. To illustrate this, consider the following:
As these rewards are driven by skewed distributions, their mean value—a key input for APR—becomes a biased estimator. Skewness is a measure of how asymmetrically data is distributed , see e.g. here. In probability theory, the mean of a skewed distribution is a poor representation of the typical outcome. Validators who are fortunate enough to receive multiple block proposals or sync committee assignments will see a disproportionately higher APR compared to validators who, through no fault of their own, are assigned fewer opportunities.
To further understand how randomness impacts APR, it is useful to visualize the reward distribution for validators operating at different scales.
The plot above shows how reward skewness changes based on the number of validators controlled. Precisely, higher is the skewness, longer is the upper tail, indicating that the overall distribution is asymmetric on the right. The consequence is that the mean is higher than the median. MEV rewards are the most skewed (bottom-right), meaning they vary the most between validators. Sync committee selection also has a significant impact (top-left), while block proposals have the least skew (bottom-left).
What’s clear is that as the number of validators increases, the skewness in rewards drops significantly. This means larger validator sets see more consistent rewards, while smaller sets face more variability due to randomness. The same holds true even by accounting for only a smaller time period instead of the whole year data.
-> This highlights why APR, when viewed in isolation, is not a reliable measure of performance, particularly for node operators running fewer validators.
This plot shows the distribution of simulated APR assuming different number of validators controlled. It is evident how the APR becomes reliable only when the number of controlled validators is high compared with the number of active validators (purple and cyan histograms). This is because, as we saw earlier, when more validators are controlled, the skewness in rewards decreases, making APR more reliable.
It is worth noting that, the aggregate APR of an entity controlling more validators is not the APR of a single customer, usually holding a lower number of validators. In this case, the APR of the small subset is affected by higher variance as in the case of low number of validators controlled.
However, when rewards are pooled—such as in solutions like Chorus One’s ETH staking vault on Stakewise —this variance is minimized. By pooling rewards across many validators, customers gain exposure to the performance of top-tier node operators while benefiting from a more consistent and stable APR.
In light of these insights, what should we look at when evaluating a validator’s true performance? A more reliable framework involves focusing on the operational aspects that are within the control of the validator:
These metrics provide a far more grounded understanding of validator performance than APR, which often serves more as a reflection of stochastic luck than actual skill or operational consistency.
At Chorus One, we approach Ethereum staking with a deep commitment to performance optimization. While APR figures may fluctuate due to the randomness of block proposals, we have developed sophisticated tools to maximize validator returns and minimize variance.
Central to this approach is Adagio, our internally optimized MEV-boost client. Adagio improves Execution Layer rewards by optimizing the way we interact with block builders. Specifically, we have introduced latency parameters that allow us to extract higher MEV rewards without compromising slot accuracy. This gives our validators a distinct advantage in capturing Execution Layer rewards, effectively smoothing out the variability that undermines traditional APR metrics.
Moreover, our focus on uptime and effectiveness ensures that our validators consistently outperform industry benchmarks. By maintaining near-perfect operational performance and leveraging cutting-edge tools like Adagio, Chorus One is able to deliver superior returns over the long term, irrespective of the randomness that defines APR calculations.
Source: Ethereum Network
Source: Chorus One
Over the past 30 days, Adagio has delivered an 8.45% increase in MEV rewards compared to a standard configuration without Adagio.
For real-time tracking of Adagio's MEV rewards and to explore its performance further, visit our live dashboard: Adagio Dashboard.
APR, while often used as a shorthand for node operator performance, is a fundamentally flawed metric. Its reliance on skewed distributions and random events, such as block proposals and sync committee participation, makes it a biased estimator for expected returns. Instead of focusing on APR, a more reliable approach to evaluating validator performance involves analyzing metrics like effectiveness, uptime, and frequency of fulfilled duties.
At Chorus One, our focus on operational precision and technical advancement allows us to consistently deliver reliable performance. With solutions like Adagio, we enhance reward optimization, offering staking outcomes that navigate the inherent volatility and randomness of APR-based assessments.
Staking ETH with Chorus One is effortless—just a few clicks, and you’re on your way to earning rewards. No hassle, just seamless staking.
Start staking today: https://opus.chorus.one/pool/stake/
Or, speak to our team to learn more.
Learn more about MEV and Ethereum node operator performance:
MEV:Metrics that Matter
Timing Games and Implications on MEV extraction
Check out all our research reports
About Chorus One
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
