Ethereum staking token weETH splits from restaking as rewards debate heats up
The move separates ordinary Ethereum staking from higher-risk restaking exposure as a new proposal to cap validator rewards divides the staking sector.
Ether.fi, a major Ethereum staking service, has removed restaking from its primary product weETH, simplifying the token for users. Previously, staking ether helped secure the Ethereum network and earned rewards, while restaking put that same ether to work a second time, securing other services for extra rewards. However, this added complexity also increased the risk of penalties.
Now, users can choose between basic staking exposure or additional restaking exposure based on their goals. The restaking rewards come with increased risk, as any failure on either system can cost part of a depositor's funds. Ether.fi has generated significant revenue, capturing around $223 million in annualized fees and $51 million in annualized revenue.
The company earned $41 million in gross revenue in Q2, with nearly $10 million in earnings after rewards and costs, though only $30,000 was distributed to ETHFI holders. This move comes as Ethereum's staking economics are under scrutiny, with some researchers proposing to stop paying stakers once half of all ether is locked up. Critics argue this could concentrate rewards among large custodians and weaken products built on staking rewards.
Written by urgent.news from CoinDesk's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
