Restaking yields have collapsed and top protocols are unprofitable; a leading Ethereum liquid restaking protocol is pivoting to crypto banking.
DeFi & Yields ·
Ether.fi, Ethereum's largest liquid restaking protocol, is exiting its core restaking business to pivot toward crypto banking, severing its structural ties to EigenLayer by the end of this quarter with less than 1% of assets remaining restaked. CEO Mike Silagadze attributed the exit to the collapse of restaking yields and mounting smart-contract risks, stating there were no meaningful yield opportunities left to justify the exposure.
The broader restaking sector has deteriorated sharply. On September 8, restaking protocols held $10.02 billion but generated only $99,977 in fees over a week—roughly 53 times less per dollar secured than plain liquid staking, which earned $27.35 million on $51.87 billion in assets. The five largest remaining liquid restaking tokens (Renzo, Kelp, Swell, Puffer Finance, and Bedrock) posted combined gross profit of $953,350 in Q2 2026, down from $2.18 million three quarters earlier.
The collapse stems from structural dynamics: the services buying restaking security never paid enough to cover both base staking yields and a premium, so the promised doubled returns never materialized. Points programs subsidizing deposits have wound down through 2025, and slashing—the penalty mechanism for operator misbehavior—went live in April 2025, introducing real downside risk without compensatory yield. What remains unclear is whether other protocols will follow ether.fi's exit or attempt to restructure their restaking offerings.