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mert
@0xmert
can someone who understands this much better than me show me how restaking doesn't totally turn a decentralized system into a fragile one vulnerable to cascading risk
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Daniel Fernandes
@dfern.eth
The long and short of it is that restaking is not the same as rehypothecation. Rehypothecation makes you vulnerable to market risk, which is an exogenous risk that you can't control. Slashing is an endogenous risk, it's 100% in your control not to sign two blocks at the same height.
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Coop
@coopahtroopa.eth
Because you get free tokens from the airdrop
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androidsixteen
@androidsixteen.eth
It's not very different from rehypothecation in tradfi, which is a common practice The benefit of doing it onchain is that the "daisy chain" of AVSs leveraging restaked security is transparent, so risks can potentially be unwound before they become systemic cc @kydo who prob has more well formed thoughts on this
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eric siu 🐈
@randomishwalk
correct
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shazow
@shazow.eth
One piece of nuance that is probably missing: Cumulative slashing risk should not exceed 100% of the stake. ETH staking + EigenLayer are careful about this. But to be fair, there's no guarantee that other permissionless participants won't allow excessive leverage on stake risk.
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Caster Cat #648 🎩🧾
@ariansh.eth
Restaking protocols may value decentralization over economic safety. In this case they may be biased to onboarding home stakers into their system because of their strong decentralization properties and can therefore strengthen the decentralization properties of the underlying blockchain
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eric siu 🐈
@randomishwalk
the question to ask here is not “is restaking dangerous” — it’ll be done anyway and absent bricking the entire thing with a protocol hard fork, you can’t really stop it the better Q might be “do i trust degenerate users and defi founders to build on top of it / use it responsibly”?
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Gwart
@gwart
oh dear. Who gave you an account
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kydo
@kydo
it is hard to answer the question given your framing. can you share a bit on how you reached this conclusion?
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kenny 🎩
@kenny
think it does but everyone just wants that sweet sweet yield so they close two eyes good list of risks from twitter https://twitter.com/hanni_abu/status/1742976353660531177
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Rue🗽
@rue1776
A successful, truly decentralized and permissionless system cannot be vulnerable to any application built on top of it. That’s the whole point of what we’re building. Also restaking is essentially a derivative. Which is a legitimate financial product
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