Popular cryptocurrency exchange Kraken has announced it’s introducing Ethereum restaking via EigenLayer, allowing users who have already staked their ETH to leverage it through its smart contracts.
The new feature could allow ETH token holders to potentially earn additional staking rewards by using their staked ETH – Ether that’s already being staked to help secure the Ethereum network’s Proof-of-Stake mechanism – to help secure decentralized applications built on EigenLayer.
Kraken’s subsidiary, Staked, a leading EigenLayer operator, will be the validator for ETH restaked using Kraken, offering a service that would usually only be available to the firm’s institutional clients.
Restaking on EigenLayer allows investors to further contribute to the security of decentralized applications built on Ethereum, known as “Actively Validated Services (AVSs).” Doing so entitles investors to earn additional rewards on top of the regular Ethereum staking rewards.
In its blog post, Kraken details hat rewards are paid out in AVS token that represent the decentralized applications the restaked ETH helps secure, which can include “tokens from sidechains, data availability layers, oracles, bridges and more.”
On top of that, restaked ETH ha a minimum 7-day escrow period that’s added to the unbounding period needed to unstake assets on the Ethereum blockchain, meaning restaking makes takes away some of the availability of users’ ETH.
Restaking ETH, Kraken notes, adds some additional risks to simple ETH staking, including smart contract risks as more smart contracts are involved in the operation, adding to potential flaws in code, bugs or backdoors that may be present.
On top of that, over the additional conditions imposed by each AVS, restaked funds may face increasing slashing of their rewards, resulting in potential losses, while counterparty risk grows with the addition of other third-parties.
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