- Coinbase (NASDAQ:COIN) analysts spot the potential risks associated with Ethereum’s EigenLayer restaking protocol.
- As per the analysts, the protocol involves both security and financial risks.
- The analysts also highlight the protocol’s potential to foster Ethereum’s innovation and infrastructure development.
In a research post dated April 2, Coinbase analysts David Han and David Duong shed light on the hidden risks of both security and finance, inherent in restaking, a zone that has grown into Ethereum’s second-largest DeFi sector.
According to the analysts’ insights, Ethereum’s restaking protocol, EigenLayer, has the potential to become “the bedrock for a wide range of new services and middleware on Ethereum.” They added that the restaking protocol helps generate “a meaningful source of ether (ETH) rewards for validators in the future.”
Reportedly, EigenLayer, which currently boasts a TVL of around $12 billion, permits validators to earn extra rewards or LRTs through participation in actively validated services (AVS). While restaking protocols park assets with EigenLayer and results in increased earnings, they pose additional challenges. The analyst…
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