Ether.fi is preparing to sever its final structural connection with EigenLayer by the end of the quarter, marking a major retreat from the restaking model that helped define the protocol’s early growth.
The company’s liquid restaking business was built around allowing users to stake Ether and then deploy the same underlying security to other blockchain services. But according to CoinDesk, ether.fi Chief Executive Mike Silagadze said the decision to leave was driven by rising perceived risk and the absence of meaningful additional yield.
Protocol documentation showed that less than 1% of ether.fi’s assets remained restaked with EigenLayer in August. EigenPod withdrawal credentials are expected to be removed by the end of the year. Ether.fi began moving away from the model in August, when it removed restaking from weETH, its widely used liquid token. WeETH now functions as a standard liquid staking token, while users seeking restaking exposure must opt into a separate token based on Symbiotic, a competing platform.
Restaking’s promised second yield
Traditional staking involves locking Ether to help secure the Ethereum network in exchange for rewards. Restaking was designed to extend that arrangement: the same staked Ether could also provide security to other services, including oracles and data-availability networks. Those services were expected to pay for the additional security, potentially giving depositors another source of income.
Liquid restaking tokens made the arrangement easier to use. Rather than leaving Ether locked and unavailable, users received a tradable token representing their position. That token could be held, traded or used as collateral in decentralised-finance markets. WeETH became the largest example of this type of asset.
The market expanded rapidly in early 2024, with liquid restaking tokens growing by more than 1,000% during the first six weeks of that year. EigenLayer’s deposits reached a peak of $19.7 billion. However, the services purchasing security did not generate enough revenue to provide the additional return the model had promised.
Data cited in the report illustrates the gap. On September 8, the restaking category held $10.02 billion and generated $99,977 in fees during the previous week. Liquid staking, by comparison, held $51.87 billion and generated $27.35 million. On a per-dollar-secured basis, ordinary liquid staking was producing roughly 53 times more fees.
The economics became less attractive as points programmes that had supported deposits wound down through 2025. Slashing also went live in April 2025. Slashing can confiscate part of an operator’s staked Ether if it behaves improperly, such as by going offline or signing conflicting messages. That turned a previously theoretical risk into a direct potential cost, without a corresponding increase in yield.
Shrinking profits and a costly warning
The remaining liquid restaking sector is now comparatively small. Renzo, Kelp, Swell, Puffer Finance and Bedrock generated a combined $953,350 in gross profit during the second quarter of 2026, down from $2.18 million three quarters earlier. Puffer reported $21,590 for the quarter, while Swell recorded $22,370.
Company accounts also suggest that the restaking rewards themselves were not the main source of profit. Kelp recorded $460,600 of EIGEN token rewards as revenue and the same amount as cost of revenue, meaning the rewards passed directly to depositors. Puffer and Swell treated staking rewards similarly. The protocols’ profits came largely from fees connected to ordinary staking beneath the restaking layer.
A security incident further highlighted the risks surrounding the tokens used to represent these positions. On April 18, an attacker exploited Kelp’s cross-chain bridge and created 116,500 rsETH tokens, worth about $293 million, without corresponding Ether backing. The tokens were deposited into Aave as collateral, allowing the attacker to borrow real Ether.
About $6 billion subsequently left Aave, while estimated potential bad debt ranged from $123 million to $230 million. Aave changed its collateral-listing standards in May to include cybersecurity and technical architecture alongside price volatility.
The incident did not involve a failure of EigenLayer’s restaking mechanism or a slashing event. Instead, it exposed the additional software risk created by the wrapper token and the bridge supporting it. With little extra yield available, investors were taking on those additional risks without being clearly compensated by the business model.
Ether.fi’s shift toward a crypto neobank
Ether.fi has responded by moving beyond staking. It now operates a card allowing users to spend against crypto without selling it, a borrowing market on the Optimism layer-2 network, and a group of vaults. The company describes this broader operation as a crypto neobank. It also added tokenised stocks, metals and fiat payment rails in August.
Silagadze said card fees grew from 17% of monthly revenue in January to 46% in July. He also said neobank revenue had replaced revenue lost from restaking and lower Ether prices, and that the company expected its overall revenue run rate to rise by about 38% this year while staking and restaking revenue declined by 70%.
DefiLlama’s figures show a different measure: ether.fi’s gross profit fell 47%, from $18.71 million in the third quarter of 2025 to $9.99 million in the second quarter of 2026. The figures are not directly comparable because a forward revenue run rate differs from reported quarterly gross profit. In the second quarter, card fees generated $3.14 million in gross profit, while EigenLayer restaking generated $2.87 million.
The broader restaking market has also contracted. EigenLayer, now rebranded as EigenCloud, markets verifiable computing, with restaked collateral serving as underlying security rather than the main product. Its holdings stood at $5.10 billion, down from $22.06 billion in August 2025.
Moneyiar market picture
Moneyiar data as of September 25-25, 2026, showed Ether at $2,681.7028821295, down 0.13% over 24 hours but up 2.05% over seven days. Shiba Inu was priced at $0.0000058406, up 0.46% in 24 hours and 6.10% over seven days.
Uniswap stood at $9.4332270255, with gains of 2.98% over 24 hours and 4.82% over seven days. Pepe was at $0.0000044327, down 0.06% over 24 hours and up 14.70% over seven days. The data was recorded at 22:03-22:04 on September 25, 2026, in the +03:30 time zone.
