Top 3 Liquid Staking and Restaking Projects to Keep an Eye On

Liquid staking and restaking platforms have made it possible for DeFi natives to maximize on yield generating opportunities. Currently, there’s over $39 billion locked across various liquid staking ecosystems while restaking protocols enjoy a TVL of $10.08 billion. 

In this article, we’ll highlight the top 3 liquid staking and restaking projects. But before jumping into the details, it is worth briefly explaining these two concepts. 

Liquid staking is an advanced version of traditional staking; instead of staking tokens directly on a Proof-of-Stake (PoS) blockchain like Ethereum or Solana where they will likely be subjected to a lockup period, liquid staking platforms such as Lido introduce the aspect of liquidity through LST tokens. When one stakes their ETH through Lido, they receive liquid stETH tokens which can be used to chase more DeFi yield-generation opportunities. 

On the other hand, restaking enables those who have staked their tokens to further leverage the assets in supporting the security of more niche protocols or modules. What this means is that staked ETH can serve a greater security purpose than only securing the Ethereum network; it can be restaked to support actively validated services (AVS), which is essentially a technical jargon for the protocols/modules built on PoS blockchains. 

That said, let’s dive into the leading projects that are building in this nascent niche: 

1. Lido 

As of writing, Lido is the largest liquid staking platform on Ethereum. There’s over $22.5 billion locked in this platform while the number of active validators stands at a whooping 304,348. 

But what exactly makes Lido standout? Besides the first mover advantage, Lido’s user base has grown significantly thanks to the ease of getting started. All that is required is for one to connect their non-custodial wallet such as Metamask and select the digital asset they want to stake, ETH or MATIC (Lido also supports staking through Polygon). 

Once a user has staked and confirmed the amount, the platform generates stTokens which ideally represent the staked assets. The beauty about stTokens (stETH) is that they can be moved around compatible DeFi ecosystems built on Ethereum to generate additional income. 

As for the ecosystem rewards, the staked tokens on Lido are obviously entitled to rewards for contributing to the security of Ethereum’s PoS network. The current APR stands at 3.27% but stakers can also receive additional rewards in the form of LDO, which is Lido’s governance token. Notably, this liquid staking platform also features institutional staking infrastructure to facilitate the onboarding of entities looking to get a piece of the DeFi pie.

2. Kelp DAO 

Kelp DAO is one of the leading and unique liquid restaking solutions out there. The concept revolves around building efficient liquid staking solutions to serve the existing public blockchain networks as well as addressing the shortcomings of restaking platforms such as Eigen Layer. 

So, how does Kelp DAO work? The process is simple. DeFi natives who have already staked their tokens and received Ethereum-based LSTs can deposit these tokens on Kelp DAO and in turn receive the platform’s liquid restaked token, rsETH. The underlying smart contracts are then tasked with distributing the rsETH to various node operators that are working with Kelp DAO. 

With this distribution of resources, Kelp DAO liquid restakers get the opportunity to contribute towards supporting more on-chain services that need a wider scope of validators for security or other operations. In return, the stakers are rewarded based on the amount of rsETH one has allocated. The rewards could vary depending on the incentivization metric or the value accrual model attached to the different services. 

What’s even better is the ease of cashing out these rewards, DeFi natives can choose to directly liquidate their rsETH tokens through AMMs or redeem them through rsETH contracts. Currently, Kelp DAO enjoys a total value locked (TVL) of $580 million and is also one of the few LRT platforms that supports over 10 blockchain networks. 

3. EtherFi 

This is another LRT that has been making waves; DeFi Llama statistics show that the project’s TVL grew from a mere $100 million at the beginning of 2024 to around $5.5 billion as of press time. Developer activity has also been impressive on EtherFi with over 100 monthly commits and annualized collected fees currently at $1.99 million. 

At the core, this LRT platform operates as a non-custodial delegated staking platform that allows DeFi users to repurpose or reuse their staked ETH to support the functionality of other DApp applications in the ecosystem. Similar to the previous examples, EtherFi features an LRT token dubbed eETH which is the asset that can be used to generate more yield with the Ethereum DApp network or traded for other digital assets. 

But what I find particularly intriguing about this project is their NFT feature; EtherFi has designed a mechanism that enables the creation of unique NFT for all the validators in its ecosystem. The idea is for these NFTs to introduce provable individuality by storing the metadata associated with each validator. It can therefore act as an insurance in the event of slashing disputes should a validator be wrongly penalized. 

Conclusion

Ethereum’s transition from a PoW to PoS network set the stage for more people to seamlessly participate in building and securing DeFi networks. However, there is still a huge disconnect between the adoption rate and the value proposition of staking and restaking initiatives. The few projects highlighted in this article are some good examples where one can get started even with little technical understanding of the DeFi realm.