What is eETH?
eETH is ether.fi's liquid restaking token, an ERC-20 token that represents a claim on ETH held by the ether.fi liquidity pool or being staked within the Ethereum Proof-of-Stake system. As a rebasing token, the balance in your wallet increases automatically as staking rewards accrue.
How ether.fi Restaking Works
When you deposit ETH into ether.fi, the protocol stakes it on Ethereum and simultaneously restakes it on EigenLayer. This process is called native restaking, meaning the ETH directly secures both Ethereum consensus and EigenLayer's Actively Validated Services (AVS).
The staked ETH earns rewards from multiple sources:
- Ethereum consensus layer staking rewards
- Execution layer tips and MEV
- EigenLayer AVS rewards (when distributed)
eETH is a rebasing token, which means your token balance increases proportionally as rewards accumulate. This differs from value-accruing tokens where the balance stays constant but the price increases.
ether.fi Protocol
ether.fi operates as a non-custodial liquid staking protocol. Users maintain control of their validator keys through a distributed validator technology (DVT) approach. The protocol has undergone multiple security audits and manages validator operations across a decentralized set of node operators.
Risks and Considerations
Slashing Risk: Restaked assets face slashing conditions from both Ethereum consensus and EigenLayer AVS protocols. If validators misbehave or AVS slashing conditions are triggered, staked ETH could be partially or fully lost. Smart Contract Risk: eETH relies on multiple smart contract layers including ether.fi's staking contracts, EigenLayer's restaking contracts, and AVS-specific contracts. Vulnerabilities in any layer could result in loss of funds. AVS Risk: Actively Validated Services may have their own bugs, governance issues, or flawed slashing logic. Early AVS implementations carry higher uncertainty. Liquidity Risk: While eETH can be traded on decentralized exchanges, large redemptions may experience slippage. Direct unstaking requires waiting for Ethereum's withdrawal queue. Centralization Considerations: The concentration of restaked ETH in any single protocol could pose systemic risks to the broader Ethereum ecosystem.Liquid restaking tokens like eETH are complex financial instruments. Users should understand the multi-layered risk profile before depositing funds.