Crypto never stands still - there’s always something new popping up in a perpetual cycle of innovation. Restaking deserves special mention though, as it’s noteworthy for being a win-win, increasing the efficiency of the entire industry. From its origins on Ethereum, restaking is now making its way to other L1s such as BNB Chain. Thankfully though, even as complexity and the number of opportunities continue to increase, advancements in automation make it easier than ever for everyone to get involved.

As the name suggests, restaking is an evolution of the popular Proof of Stake (PoS) consensus mechanism used by many noteworthy blockchains including Polkadot, Avalanche, Cardano, BNB Chain, and of course Ethereum which made the switch to PoS from Proof of Work. Restaking is an innovative concept that has been getting a lot of attention in recent months, and while the technology can be perceived as overly complex, the core concept is actually quite straightforward. Most of the time, staked assets tend to provide a large amount of economic security for a single blockchain and earn relatively low rewards compared to if these assets were deployed elsewhere. Restaking simply also allows these staked assets to multitask and provide security to multiple networks and applications simultaneously.

The demand for restaking comes from projects that require a way to bootstrap economic security that is quick, cost-effective, scalable, safe, and decentralised. Robust security ensures that projects like bridges can’t be exploited, and oracles can’t be manipulated. In leveraging restaking, these projects can easily establish a robust consensus mechanism that doesn’t require a separate expensive staking system to be built from scratch. This is particularly important for smaller blockchains or emerging protocols, since they no longer need to go through the complex, time-intensive, and expensive process of setting up a network of node operators that holds sufficient staked assets. By removing this significant barrier to entry, restaking can unlock significant growth for the entire industry. Projects can be more nimble, either deciding to raise fewer funds, or deploying their treasury elsewhere, with the problem of cultivating early-stage economic security now being solved by restaking.

The supply of restaked economic security is driven by asset holders who are seeking increased utilisation and a higher return on their portfolio. These restakers stand to gain significantly, as by helping to secure multiple networks concurrently they also earn multiple reward streams - every project that makes use of restaked economic security must pay the providers of that security. This has the added benefit of providing a diversified income stream from a single asset type, providing portfolio resilience for restakers. However, like many parts of the rapidly evolving cryptocurrency world, it can be difficult for asset holders to know how best to participate in restaking.

Liquid restaking tokens (LRTs) have come to the rescue, making restaking straightforward to access. By simply acquiring an LRT like Kelp DAO’s rsETH, holders benefit from earning Ethereum staking rewards while also participating in restaking across a portfolio that’s actively curated and managed by the Kelp DAO. Just like liquid staking tokens (LSTs) before them, LRTs allow users to maintain liquidity while participating in restaking. This adds a potential third layer of using LRTs in DeFi applications such as lending and borrowing. Simply swapping ETH for rsETH provides incredibly easy access to the exciting world of restaking and democratises participation in what would otherwise be a very complex financial product.

But wait, there’s more! Kelp DAO has also launched the Gain Vault, an innovative system designed to integrate directly with L2s and multiple DeFi protocols and strategies. By depositing rsETH into the Gain Vault, users can enjoy automated exposure to a wide range of DeFi positions without the headache of managing everything individually, further maximising their rewards with just a single click. The Gain Vault’s smart contracts manage asset deployments to maximize rewards and potential airdrops. Users depositing assets into the vault will receive a synthetic token in return, agETH, representing their position in the vault.

To date, much of the innovation in restaking has taken place on Ethereum, and specifically with EigenLayer which was the first restaking protocol to launch. But the same technology can be applied to other PoS blockchains, including BNB Chain. Staking on BNB Chain is slightly different to Ethereum, and requires holders of BNB tokens to delegate their asset to validators. BNB Chain is already one of the largest L1s with over $5 billion in TVL, and hundreds of protocols. By increasing the availability of affordable economic security, restaking could act as a catalyst to unlock a wave of development on BNB Chain.

Restaking isn’t showing any signs of slowing down, and the technology continues to gain traction and provide benefits for participants across the crypto industry. Gone are the days of compromised early-stage projects, destined to suffer through months or years of expensive struggling with the blockchain trilemma as they attempt to balance decentralisation, security, and scalability. By building on established PoS foundations, restaking provides a platform for cryptocurrency ideas to flourish rapidly, unlocking the next wave of innovation in blockchain technology.