Restaking fees lag ordinary staking as Ether.fi exits EigenLayer and Ether.fi shifts toward cards, borrowing and vaults.
ETHFI$0.698298-2.03%Restaking is losing its most prominent product. Ether.fi will remove its last structural tie to EigenLayer this quarter, leaving less than 1% of its assets restaked. That retreat comes after a summer in which the company stripped the feature from weETH, its main liquid token.
The change is easy to miss because Ether.fi isn't leaving crypto infrastructure behind. It is replacing one layer with products closer to everyday financial use. The crypto-spending card, borrowing markets and vaults now take priority over the restaking system that once sat underneath them.
But the economics behind the retreat are harder to ignore. Ether.fi says restaking offered too little extra yield to justify its risk. Its wider peers face the same problem.
Restaking lets staked assets secure services beyond Ethereum's base layer. The pitch was simple: lock the ETH, provide extra security, and earn more than ordinary staking.
The extra income never arrived at the promised scale. Services buying security didn't pay enough to cover the base staking yield and a premium on top. Restaking therefore added complexity and exposure without reliably adding much more revenue.
The growth was real, even if it was brief. EigenLayer held $19.7 billion at its peak, while liquid restaking tokens grew by more than 1,000% in the first six weeks of 2024, according to CoinDesk's review of the sector.
By September, the balance had changed. CoinDesk reported that the restaking category held $10.02 billion and generated $99,977 in fees over the prior week. Liquid staking held $51.87 billion and generated $27.35 million over the same period. Based on those figures, ordinary staking produced roughly 53 times more fees per dollar secured. That's CoinDesk's calculation from the category figures, not a metric published by DeFiLlama itself.
Ether.fi's change to weETH is a practical version of the larger retreat. In August, the company removed restaking from the token, leaving weETH as a plain liquid staking token.
That changes the product. WeETH can still represent staked ether in DeFi and serve as collateral. It just doesn't have to carry the extra structure and risks associated with restaking.
The remaining link to EigenLayer is smaller. Protocol documentation put the share of ether.fi assets still restaked at under 1% in August. Those assets had withdrawal credentials tied to EigenPod, which ether.fi plans to remove by the end of the year.
CEO Mike Silagadze tied the decision to the risk-reward calculation. There were no meaningful restaking yield opportunities, he said, while stakers still perceived risk. Leaving restaking made more sense than keeping the structure for a small return.
It's a striking reversal for a product built around added security and yield. The extra layer didn't earn enough to keep people in it.
The same pattern appears in the remaining liquid restaking tokens. Renzo, Kelp, Swell, Puffer Finance and Bedrock generated $953,350 in combined gross profit during the second quarter of 2026. Three quarters earlier, the same five tokens generated $2.18 million.
Some of those profits came from ordinary staking rather than the restaking layer. On Kelp's books, $460,600 in EIGEN token rewards was recorded as both gross revenue and cost of revenue because the rewards passed directly to depositors. Puffer and Swell account for staking rewards in the same way. Their remaining profit came from fees charged by the staking activity underneath the wrapper.
That distinction matters. A protocol can show revenue from rewards while retaining little of it. Restaking activity can look substantial in gross terms without creating a durable business for the company operating it.
The sector also had to cope with a change in its risk profile. Slashing went live in April 2025, making penalties for faulty or misbehaving services a real part of the system. Before that, the risk had been mostly theoretical. Once penalties were active, restaking carried a priced downside without enough extra yield to compensate for it.
At the same time, points programs that subsidized deposits wound down through 2025. Those programs had helped attract deposits. As they faded, the sector had to stand on fees and service payments rather than temporary rewards.
Kelp's bridge exploit showed why security matters here. On April 18, an attacker created 116,500 rsETH, worth about $293 million, without backing it with ether. The attacker deposited the fake tokens into Aave as collateral and borrowed real ether. Around $6 billion left Aave in the following days, with potential bad debt of $123 million to $230 million.
EigenLayer itself wasn't the failed component, according to the report. Nothing was slashed, and no restaking mechanism broke. The weak point was Kelp's cross-chain bridge, the system used to move the token between blockchains.
Silagadze disputes the idea that the hack was a failure of leverage. He attributes it to poor security practices around cross-chain operations. Either way, the incident placed a large question mark over the infrastructure wrapped around restaking.
The money hasn't simply left crypto lending. CoinDesk says it moved from ether-based restaking into dollar markets.
Morpho, the largest venue for curated vaults, now holds around $5.8 billion. That model lets curators build lending markets around specific assets and strategies. It also makes the risks easier to see when the underlying asset fails.
Stream Finance is a warning about what can happen when the collateral doesn't behave as lenders assume. On November 4, 2025, it disclosed about $93 million in losses and froze withdrawals. Its xUSD token, designed to stay near $1, fell 77% in a day.
Curators built Morpho vaults where depositors supplied real stablecoins against xUSD. The borrowed stablecoins were then used to buy more xUSD. Because those markets valued xUSD at a fixed $1 instead of its market price, automatic liquidations didn't trigger when the token fell. Researchers later mapped roughly $285 million of debt exposure across lending platforms, though the article doesn't identify the researchers or explain their method.
A second dollar token, 65% backed by loans to Stream, fell about 98% and was wound down. The comparison with ether.fi is direct. Restaking originally added another security layer to ETH. The newer lending markets add layers of exposure to dollar tokens, loans and collateral assumptions.
Ether.fi is trying to make its next phase work without restaking as its foundation. Its card lets users spend against crypto without selling it. The company also operates a borrowing market on Optimism and a set of vaults. In August, it added tokenized stocks, metals and fiat rails.
The card's share of monthly revenue rose from 17% in January to 46% in July, CoinDesk reported. Card fees generated $3.14 million in gross profit in the second quarter of 2026. EigenLayer restaking generated $2.87 million, making restaking ether.fi's second most profitable line at the point the company decided to leave.
Silagadze says the new businesses fully replaced revenue lost from restaking and a lower ETH price. He also says ether.fi's overall revenue run rate is on track to rise 38% this year while staking and restaking revenue has fallen 70%.
That growth claim needs a caveat. Ether.fi hasn't published the basis for it. DeFiLlama's figures show gross profit falling 47%, from $18.71 million in the third quarter of 2025 to $9.99 million in the second quarter of 2026. Silagadze also disputes how cashback is treated in DefiLlama's card figures. The company says $5.83 million in card rewards was counted as both revenue and cost, leaving no contribution to profit.
So the product shift is clear. The financial outcome is less settled.
Ether.fi isn't the only project changing how it presents restaking. EigenLayer, now called EigenCloud, markets verifiable computing, which lets applications prove that work done off-chain was completed correctly. Restaked collateral sits underneath the service rather than being the main product.
That framing may be more honest about where restaking fits. It can support services, but the evidence suggests it doesn't create enough income by itself to support the protocols built around it.
EigenLayer's holdings have fallen to $5.10 billion from $22.06 billion in August 2025. Ether.fi's exit is one visible part of a broader shift. Capital is moving toward products that charge for practical financial use, while restaking becomes a lower layer beneath them.
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