Ether.fi splits weETH into two tokens as reward-cap debate grows
DeFi & Yields ·
The staking provider removed restaking from its flagship weETH token, creating a separate token, weETHs, for users who want restaking exposure.
Ether.fi, which manages roughly $3.55 billion in customer deposits, has reworked its main product so weETH now tracks only ordinary Ethereum staking returns, according to Coindesk. Holders seeking the added yield from restaking must instead move into weETHs, a newly created token built for that purpose.
The distinction matters because staking and restaking carry different risk profiles: staking involves locking ether to support the network in exchange for rewards, while restaking reuses that same staked ether to secure additional services for further rewards. Combining both in one token meant every weETH holder was exposed to both sets of risks — including the chance of losing part of a deposit if either system failed — regardless of whether they wanted the extra yield. Splitting the token lets users pick their exposure directly, with weETH offering baseline staking returns and weETHs carrying the higher-yield, higher-risk restaking layer.
Ether.fi reports about $223 million in annualized fees and roughly $51 million in annualized revenue. For the second quarter, it posted $41 million in gross revenue and close to $10 million in earnings after accounting for rewards and other costs, while only $30,000 in value was passed on to ETHFI holders through buybacks.
The restructuring arrives alongside a broader dispute over how Ethereum should handle staking incentives. A group of researchers, including one from the Ethereum Foundation, has proposed halting staking payments once half of all ether in circulation is staked, arguing that the current model — where rewards never hit zero no matter how much ether is locked up — encourages concentration among a small number of large custodians. Under the proposal, rewards would shrink progressively and reach zero once staked ether nears 60 million; about a third of all ether is staked at present.
Ether.fi's founder, Mike Silagadze, has pushed back on the proposal, contending it would disadvantage smaller stakers and undermine products, including his own, that depend on staking rewards.
It remains unclear how the reward-cap proposal will be received by the wider Ethereum research and validator community, or whether other staking providers will follow Ether.fi in separating their staking and restaking products.