The opening of the last bull market was led by liquidity mining, inaugurating the "DeFi Summer." Therefore, many believe that this round of the bull market will still be initiated by the DeFi sector, with liquid restaking being the most likely catalyst.
Since the transition from Ethereum's consensus mechanism to PoS, the demand for staking Ethereum has increased sharply, leading to the rapid development of liquidity staking protocols.
Liquid restaking is an Ethereum innovation protocol proposed by Sreeram Kannan, the founder of the Eigenlayer project. Its core mechanism is to restake the ETH already staked on Ethereum onto other consensus protocols to earn more staking rewards, while also contributing to network security and decentralization.
2.1 Improved capital efficiency and increased profits
Traditional staking usually requires assets to be locked to ensure network security. Liquid restaking allows investors to stake their already staked assets in other protocols without withdrawing the original staked assets, achieving multiple uses of funds and increasing capital efficiency. At the same time, stakers can earn profits from multiple staking protocols, increasing profits.
2.2 Increased liquidity
Liquid restaking solves the liquidity dilemma of traditional staking. This method involves restaking synthetic assets after staking and using them in DeFi protocols in the market to generate additional income. This effectively enhances market liquidity.
2.3 Reduction of selling pressure
Liquid restaking improves the efficiency of native assets, effectively reducing market selling pressure and contributing to the healthy development of the market.
2.4 Increased network security
Liquid restaking encourages more users to participate in staking, which is beneficial for enhancing the security and decentralization of Ethereum, as well as strengthening the stability and security of the entire ecosystem.
3.1 Smart Contract Risks
In the event of security vulnerabilities or design flaws in smart contracts, there may be a risk of asset loss because attackers may exploit these vulnerabilities or flaws.
3.2 Increased Educational Threshold
For many practitioners, restaking requires a deep understanding and multi-level interactive operations. However, complexity and other issues in this process may deter some investment users. Additionally, understanding the staking and earning mechanisms, as well as solving the problem of effectively restaking assets across multiple networks for maximum profit, is necessary.
3.3 Liquidity Risks
In the crypto market, the main concerns of users regarding staking mechanisms are lockups and insufficient liquidity during extreme market conditions, which may result in the liquidation of staked assets.
Liquid restaking requires a certain level of participation threshold. In addition to understanding its operation mechanism and profit logic, it is also necessary to conduct security and high-yield screening among many related projects. Care should also be taken with online phishing links to avoid asset loss.
In addition, many participants choose to pay early attention to the liquid restaking field and layout related tokens. Currently, the MEXC platform has launched relevant tokens, and you can spot trade or futures trade on the MEXC exchange.
Let's take the ETHFI token as an example. Open and log in to the MEXC App, then enter "ETHFI" in the search box on the homepage. Select [ETHFI] under "Spot" to enter the K-line chart page, then tap [Buy] to enter the trading page. Select the order type, enter the quantity, and tap [Buy ETHFI] to complete the purchase.
Disclaimer: This information does not provide advice on investment, taxation, legal, financial, accounting, consultation, or any other related services, nor does it constitute advice to purchase, sell, or hold any assets. MEXC Learn provides information for reference purposes only and does not constitute investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. The platform is not responsible for users' investment decisions.