You may have heard restaking compared to a risky financial maneuver. That’s not exactly right. There are key differences, with profoundly different types of risk.
Opinion by: Andrew Redden, CEO of HypurrFi
One of the most significant innovations for cryptocurrency to have come out of 2024 was what’s known as “restaking.” Restaking lets new projects “borrow security” from staking protocols like Ethereum by packaging staked tokens into new, liquid tokens that can be staked elsewhere. Restaking seems like a win-win, giving new products access to existing security through the market while generating additional yield for stakers.
Ethereum co-founder, Vitalik Buterin, and others, feel restaking and liquid staking may not be risk-free. Many comparisons have been made between restaking and so-called “rehypothecation,” or collateral re-use. Rehypothecation played a significant role in the collapse of Lehman Brothers, for instance, helping trigger the Great Financial Crisis.
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