Ether.fi Exits Restaking as Protocol Profits Shrink

Ether.fi plans to sever its last structural tie to EigenLayer by the end of this quarter, after leaving less than 1% of its assets restaked. CEO Mike Silagadze said the decision reflected rising risk and a lack of meaningful yield. The economics have weakened across the sector: restaking secured $10.02 billion and generated $99,977 in fees over the week cited, while liquid staking secured $51.87 billion and generated $27.35 million. Per dollar secured, ordinary liquid staking earned roughly 53 times more.

Why it matters

Restaking was designed to let staked ETH secure additional services, creating a second yield on the same capital. But the services buying that security did not generate enough revenue to pay both the base staking yield and an additional premium. Points programs that had subsidized deposits wound down through 2025, and slashing went live in April 2025, adding a real penalty risk without a corresponding yield uplift.

The five largest remaining liquid restaking tokens reported a combined $953,350 in gross profit in the second quarter of 2026, down from $2.18 million three quarters earlier. In some protocols, EIGEN rewards passed through to depositors as both revenue and cost, leaving no profit from those rewards. The article's figures indicate that ordinary staking fees, rather than the restaking layer, generated what profit remained.

Market impact

The Kelp bridge exploit exposed another cost of liquid restaking: wrapper risk. An attacker created 116,500 unbacked rsETH worth about $293 million, then used it as collateral on Aave. Around $6 billion left Aave in the following days, with potential bad debt estimated at $123 million to $230 million. The exploit targeted a cross-chain bridge, not EigenLayer's restaking mechanism, but it highlighted the additional software and collateral risks carried by liquid restaking tokens.

Ether.fi is shifting toward cards, borrowing, vaults and other neobank services rather than relying on restaking. Its card's share of monthly revenue rose from 17% in January to 46% in July, according to Silagadze. DefiLlama figures, however, show gross profit falling from $18.71 million in the third quarter of 2025 to $9.99 million in the second quarter of 2026. The divergence reflects different measures: the company cited revenue and a forward run rate, while DefiLlama reports trailing gross profit. The broader test for restaking is whether demand for the security it provides can support a profitable business without deposit incentives.