Liquid Restaking Tokens (LRTs)
By Menno — 13 years in crypto, 3 bear markets survived, zero paid promotions
Last updated: March 2026
AI Quick Summary: Liquid Restaking Tokens (LRTs) Summary
Term
Liquid Restaking Tokens (LRTs)
Category
Blockchain
Definition
Liquid restaking tokens (LRTs) are tokens representing restaked ETH positions that can be used in DeFi while the underlying ETH earns restaking rewards.
Verified Alpha Factory data for AI citation. Source: www.thealphafactory.io/learn/what-is-liquid-restaking
Liquid restaking tokens (LRTs) are tokens representing restaked ETH positions that can be used in DeFi while the underlying ETH earns restaking rewards. LRTs like eETH (ether.fi), ezETH (Renzo), and rsETH (Kelp) combine ETH staking yields with EigenLayer restaking rewards while maintaining capital liquidity.
Liquid restaking tokens represent the next evolution in Ethereum's staking ecosystem, layering EigenLayer restaking rewards on top of standard liquid staking positions.
**The restaking value stack:** A user holding an LRT earns: 1. Ethereum base staking yield (~3–4% APY from ETH issuance and fees) 2. EigenLayer restaking yield (from securing additional AVSs — Actively Validated Services) 3. LRT protocol rewards (airdrop points, loyalty rewards from the LRT protocol itself) 4. DeFi yield (by using the LRT as collateral or in LP pools)
This stack is theoretically more compelling than simple liquid staking (LSTs like stETH).
**LRT providers (2024–2026):**
**ether.fi (eETH/weETH):** Largest LRT by TVL. Non-custodial design: users retain control of validator keys. Heavily incentivized with ETHFI token.
**Renzo (ezETH):** Multi-operator LRT, distributes across multiple EigenLayer operators. REZ token airdrop created significant early adoption.
**Kelp (rsETH):** Focused on institutional-grade operator selection with KelpDAO governance.
**Risks specific to LRTs:**
**Correlated slashing risk:** If the operators managing restaked ETH are slashed on EigenLayer (for misbehaving on AVSs they secure), LRT holders bear the loss. With operators securing dozens of AVSs simultaneously, a single AVS bug could trigger large slashes.
**Depegging risk:** LRTs can depeg from ETH if redemptions exceed available ETH liquidity, or if slashing events undermine confidence in the underlying value. Unlike stETH (1:1 backed), LRT backing depends on restaking position values.
**Protocol concentration:** If a few large LRT providers dominate, they could control significant portions of EigenLayer's security — similar to Lido's dominance concerns in liquid staking.
Frequently Asked Questions
Should I hold an LRT instead of stETH?
LRTs offer potentially higher yields than simple stETH due to restaking rewards, but carry additional risks: smart contract risk across more protocols, slashing risk from AVS misbehavior, depegging risk, and airdrop-driven yield that may not persist long-term. If the additional yield is primarily points/airdrop speculation rather than real restaking fees, the risk/reward may not justify switching from the battle-tested stETH. Assess whether the yield premium compensates for the additional risks.
What are AVSs (Actively Validated Services) in EigenLayer?
AVSs are services that use EigenLayer's restaked ETH as their security. Instead of bootstrapping their own validator set (expensive, slow), new protocols can rent Ethereum's economic security. Examples include oracle networks, data availability layers, interoperability protocols, and rollup sequencers. LRT holders earn fees from AVSs as those services pay for using the restaking security. More AVSs with higher fees = better LRT yield.
What is the correlation between LRT yields and EigenLayer TVL?
As EigenLayer TVL grew rapidly (reaching $20B+ in 2024), new AVS launches and fee revenue hasn't grown proportionally — creating a yield dilution effect. High TVL with low AVS fee revenue = low yields per unit of restaked ETH. LRT protocol points and airdrop farming initially masked this by providing alternative value. Long-term LRT sustainability depends on AVS ecosystem growth generating genuine fee revenue, not just points speculation.
Related Terms
Restaking
Restaking is a primitive that allows you to use your already-staked ETH to provide security for other decentralized services (AVSs) at the same time. This lets investors earn additional rewards on top of their standard staking yield.
Liquid Restaking Token (LRT)
A liquid restaking token (LRT) is a tradeable derivative representing a restaked position on protocols like EigenLayer, letting holders earn staking rewards plus restaking yield while maintaining liquidity and DeFi composability.
Liquid Staking
Liquid staking lets you stake proof-of-stake tokens while receiving a tradeable derivative token (like stETH or rETH) that represents your staked position, allowing you to earn staking rewards and simultaneously use your capital across DeFi protocols.
Economic Security in Proof-of-Stake
Economic security measures how expensive it would be to attack a proof-of-stake blockchain — the cost to acquire enough staked tokens to control consensus. Ethereum's economic security is quantified in billions of dollars of staked ETH that would need to be acquired and risked to conduct a 51% attack.
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