The world of decentralized finance (DeFi) continues to evolve, with staking and restaking emerging as central pillars of value creation in proof-of-stake (PoS) blockchains. Two ecosystems leading this innovation—Ethereum and Solana—have taken divergent paths in how they structure their staking economies. By examining flagship protocols like Lido on Ethereum and Solayer on Solana, we can uncover fundamental differences in business models, incentives, and long-term sustainability.
This analysis explores how liquid staking, restaking, and liquid restaking function across these networks, why certain design choices were made, and what opportunities arise from architectural and economic distinctions.
The State of Staking: Core Concepts and Revenue Streams
Before diving into protocol-specific mechanics, it's essential to understand the three primary sources of revenue tied to staking in PoS blockchains:
- Consensus Layer (PoS) Rewards
These are native token emissions paid to validators for securing the network. On Ethereum, this rate adjusts dynamically based on total staked ETH; on Solana, it's higher and more stable, currently around 6.5% annual yield. - Execution Layer (Transaction) Rewards
Includes priority fees (gas tips) and MEV (Maximal Extractable Value), earned by validators who order transactions. This stream fluctuates with network activity. Post-EIP-4844, Ethereum’s execution rewards have declined, while Solana’s have grown due to increased on-chain demand. - Staked Asset Rental Income
Protocols rent staked assets to provide services—security for Eigenlayer, or transaction priority via Solana’s swQoS. This is the foundation of restaking.
These revenue streams form the backbone of all staking-related protocols. How each project captures and combines them determines its competitive edge.
Ethereum’s Staking Ecosystem: Lido, Eigenlayer, and Etherfi
Lido: Dominating Liquid Staking
Lido remains the undisputed leader in liquid staking, with nearly 90% market share among Ethereum-based liquid staking tokens (LSTs). Its core offering—stETH—allows users to stake ETH without lockups or technical overhead.
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How Lido Works:
- Users deposit ETH → receive stETH
- Lido operators run validator nodes
- stETH holders earn consensus + execution layer rewards
- stETH is composable across DeFi
Despite Shapella enabling ETH withdrawals, Lido retains dominance due to superior liquidity and integration depth.
However, Lido has consciously avoided launching a restaking product. In alignment with Ethereum’s ethos of decentralization, co-founder Hasu confirmed that stETH will remain an LST, not become an LRT (liquid restaking token).
Instead, Lido supports restaking indirectly:
- Investing in Symbiotic (a restaking protocol)
- Promoting stETH as top collateral in restaking markets
- Supporting Ethereum-aligned validator services like preconfirmations
This strategic restraint stems from concerns about overloading Ethereum’s consensus—a theme echoed by Vitalik Buterin himself.
Eigenlayer: Pioneering Restaking
Eigenlayer introduced restaking, allowing users to re-use already-staked ETH (or LSTs like stETH) to secure third-party applications known as AVSs (Actively Validated Services).
AVS examples include:
- Data availability layers (e.g., EigenDA)
- Bridges
- Oracles
- Threshold signature schemes
Eigenlayer acts as a marketplace:
- Supply side: ETH stakers offer security
- Demand side: AVSs pay for it
- Eigenlayer earns a cut
But here lies a critical question: Is there real demand for outsourced security?
Many AVSs rely on their own tokens for security (e.g., Chainlink with LINK, Celestia with TIA). Paying Eigenlayer could undermine their tokenomics. As Multicoin Capital’s Kyle Samani noted: "Who pays for this? Where does the money come from?"
Thus far, most returns come from $EIGEN token incentives, not sustainable usage fees—raising doubts about product-market fit (PMF).
Etherfi: Filling the Gap with Liquid Restaking
Enter Etherfi, a liquid restaking protocol (LRT) that simplifies participation in Eigenlayer’s native restaking.
Users deposit ETH → receive eETH → automatically participate in restaking → earn:
- Base staking yield (~3%)
- Eigenlayer AVS rewards
- $EIGEN and $ETHFI incentives
Etherfi’s innovation lies in abstraction: no need to manage validator keys or Eigenpods. It captures all three revenue streams, acting as an ETH yield aggregator.
At its peak, Etherfi reached over $8 billion FDV, becoming the fourth-largest staking entity on Ethereum.
But its existence depends on two fragile assumptions:
- Lido won’t offer liquid restaking
- Eigenlayer won’t offer liquid staking
If either shifts strategy, Etherfi’s value proposition weakens significantly.
Why These Limitations Exist: The Ethereum Philosophy
The fragmentation between staking, restaking, and liquid restaking isn't accidental—it reflects deliberate design constraints rooted in Ethereum’s culture.
Lido’s Self-Restraint
With ~30% of all staked ETH under its umbrella, Lido faces constant scrutiny over centralization risks. To stay aligned with Ethereum’s values, it avoids expanding into restaking directly.
Eigenlayer’s UX Trade-offs
Eigenlayer hired Ethereum researchers like Dankrad Feist to ensure compatibility with core principles. Its complex native restaking process—requiring manual key setup—isn't poor UX; it's intentional caution against systemic risk.
In essence, Etherfi thrives because of institutional caution, not despite it.
Solana’s Approach: Performance Over Purity
Solana takes a different stance—performance-first, with pragmatic views on decentralization. This shapes its unique take on staking and restaking.
Enter swQoS: Stake-Weighted Quality of Service
Launched after April 2024 upgrades, swQoS prioritizes transactions based on validator stake weight. A validator controlling X% of total stake can submit up to X% of transactions per slot.
This mitigates spam during high congestion (e.g., meme coin surges) by deprioritizing low-stake actors.
Critically, swQoS creates a new use case: transaction reliability as a service.
Solayer: Redefining Restaking for Solana
Solayer positions itself not as a security provider like Eigenlayer—but as an endogenous AVS platform, serving protocols within Solana that need guaranteed transaction inclusion.
Compare:
| Feature | Eigenlayer (Exogenous AVS) | Solayer (Endogenous AVS) |
|---|---|---|
| Service Type | Security for external systems | Transaction priority on Solana |
| Use Case | Securing bridges, DA layers | Ensuring DEX trades go through |
| Underlying Mechanism | Reputation + slashing | swQoS stake weighting |
| Revenue Source | AVS fees | Priority access payments |
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How Solayer Works:
- User deposits SOL → receives sSOL (a liquid staking token)
- Solayer stakes SOL → earns base yield (~6.5%)
- User delegates sSOL to apps needing high-priority access → earns rental fees
Unlike Eigenlayer, Solayer issues its own LST, combining liquid staking and restaking in one seamless flow—similar to what Lido could do if unencumbered.
And because swQoS is baked into Solana’s consensus, demand for transaction reliability is more immediate than abstract "security leasing."
Comparative Advantage: Why Solana May Lead in Staking Innovation
Let’s compare key metrics:
1. Base Staking Yield
- Solana: ~6.5%
- Ethereum: ~2.8% and falling
Higher inflation fuels stronger incentives for participation.
2. Real Economic Value (REV)
Using Blockworks’ REV metric (fees + MEV):
- Solana surpassed Ethereum in mid-2024
- Reflects stronger demand for on-chain activity
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3. Broader Restaking Scope
On Ethereum, restaking = security-as-a-service
On Solana, restaking = bandwidth + security + reliability
With swQoS, any dApp needing reliable execution can become an AVS consumer—greatly expanding potential demand.
Moreover:
- Jito (Solana’s leading LST issuer) can expand into restaking
- Solayer and Fragmetric show restaking protocols can issue LSTs
- No ideological barriers prevent vertical integration
Is Solayer’s Restaking a Good Business?
While PMF remains unproven across all restaking platforms, Solana presents a stronger foundation due to:
✅ Higher base yields
✅ Growing real economic activity
✅ Built-in demand for transaction priority
✅ Flexible composability between LSTs and AVSs
✅ No philosophical resistance to integrated models
Solayer isn’t just copying Eigenlayer—it’s redefining restaking around Solana’s unique architecture.
If demand for reliable execution grows alongside DeFi complexity (e.g., arbitrage bots, limit orders, perps), Solayer could become indispensable infrastructure.
Frequently Asked Questions (FAQ)
Q: What is the difference between staking and restaking?
A: Staking involves locking tokens to secure a blockchain. Restaking allows users to reuse already-staked assets to provide security or services to other protocols, amplifying yield potential.
Q: Can I use stETH on Solana?
A: Not natively. Cross-chain bridges exist, but Solana’s ecosystem relies on native solutions like sSOL and JitoSOL for liquid staking.
Q: Is restaking risky?
A: Yes. Additional slashing conditions apply when participating in AVSs. You can lose staked assets if the service you validate misbehaves.
Q: Why does Solana have higher staking yields than Ethereum?
A: Solana uses higher inflation to incentivize validator participation and network security, especially during periods of rapid growth.
Q: Will Lido ever launch restaking?
A: Unlikely in the near term. Lido has publicly committed to staying focused on liquid staking and supporting aligned projects like Symbiotic instead.
Q: How does swQoS affect regular users?
A: During congestion, high-stake validators get priority. This means better uptime for major protocols but potentially delayed transactions for smaller actors.
Final Thoughts
While Ethereum laid the conceptual groundwork for staking and restaking, Solana may win in execution—not just technically, but economically.
Protocols like Solayer leverage native features like swQoS to create tangible utility beyond abstract security leasing. Meanwhile, Ethereum’s ecosystem remains fragmented by philosophical guardrails and institutional caution.
For builders and investors alike, Solana’s model suggests a future where staked assets don’t just secure networks—but power performance-critical applications directly.
As both ecosystems mature, the contrast will sharpen: one optimized for principle, the other for practicality. And in DeFi, sometimes speed wins over purity.
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