Ether.fi exits restaking as yields shrink and crypto neobank revenue rises

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Ether.fi exits restaking

Highlights

Ether.fi will fully remove its last link to EigenLayer by year-end, citing diminished restaking yields and lingering risk, with less than 1% of assets still restaked as of August.
Restaking generated only $99,977 in weekly fees for $10 billion secured, compared to $27.35 million for liquid staking's $51.87 billion, and sector gross profit dropped to $953,350 in Q2 2026.
Kelp's April 2025 exploit resulted in $293 million in unbacked rsETH minted, prompting Aave to tighten collateral standards, and highlighting rising security risks in liquid restaking.

Ether.fi shifts away from restaking

As reported by CoinDesk, ether.fi plans to remove its last structural tie to EigenLayer this quarter, with protocol documentation showing less than 1% of assets still restaked as of August and EigenPod withdrawal credentials due to be removed by year-end.

When ether.fi launched in 2024, deposits were automatically restaked on EigenLayer. In August, the company removed restaking from weETH, the version of its token that circulates across DeFi and is used as collateral, turning it into a standard liquid staking token. Users who still want restaking now have to opt into a separate token built on Symbiotic, a rival platform.

Chief executive Mike Silagadze says the decision reflects a poor risk-reward balance. He says meaningful restaking yields have disappeared while stakers still perceive added risk, making an exit the more sensible option.

That shift comes as the broader economics of restaking weaken sharply. Restaking secures about $10 billion but generated just $99,977 in fees over a recent week, while liquid staking, with $51.87 billion secured, generated $27.35 million. On that basis, ordinary staking earns roughly 53 times more per dollar secured.

Restaking's original promise was that locked ETH could secure Ethereum and then be reused to protect outside services such as oracles and data availability layers, generating an extra yield stream. But the services buying that security have not paid enough to support both the base staking return and a premium on top, leaving the model with little incremental income for depositors.

Sector pressure reshapes crypto lending and staking

The incentive to stay in restaking weakened further after deposit-subsidy points programs faded through 2025 and slashing went live in April 2025. That introduced a real financial penalty for operator failures or misconduct, adding downside without enough extra yield to offset it.

The remaining liquid restaking sector is also shrinking on a profit basis. Excluding ether.fi, Renzo, Kelp, Swell, Puffer Finance and Bedrock posted combined gross profit of $953,350 in the second quarter of 2026, down from $2.18 million three quarters earlier.

Security concerns have added to the pressure. On April 18, an attacker exploited Kelp's cross-chain bridge and minted about 116,500 rsETH, worth roughly $293 million, without ETH backing, then used the tokens as collateral on Aave to borrow real ether. Billions left Aave in the following days, and the incident pushed the lending protocol in May to revise collateral listing standards to include cybersecurity and technical architecture alongside price volatility.

Silagadze argues the Kelp incident reflects weak cross-chain security rather than leverage problems, and notes EigenLayer itself did not fail. Still, the episode exposed the additional software risk embedded in liquid restaking tokens, leaving holders with extra attack surface and little added yield.

Ether.fi is responding by broadening its business model. The company now offers a card that lets users spend against crypto without selling it, a borrowing market on Optimism and a set of vaults, and it describes itself as a crypto neobank. In August it also added tokenized stocks, metals and fiat rails.

That diversification is already changing revenue mix. The card's share of monthly revenue rose from 17% in January to 46% in July, and Silagadze says neobank revenue has replaced lost restaking income and lower ETH-price-related revenue. Even so, DefiLlama figures show ether.fi's gross profit falling 47% from $18.71 million in the third quarter of 2025 to $9.99 million in the second quarter of 2026.

EigenLayer's technology continues to operate, with EigenDA running on mainnet at 100 MB/s and remaining the largest service by value secured. The central issue for the market is not whether restaking works technically, but whether it can generate enough revenue to support protocols built around it.

Potential sale of Irish regtech software firm Fenergo has been on the radar, with its owners Bridgepoint and Astorg weighing a formal process that could start in early 2027 at a valuation above £2 billion. Our earlier article noted that Fenergo has been growing revenue and operating profit while positioning its AI-driven platform for demand from large banks and insurers seeking to automate compliance-heavy workflows.

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