Restaking Risk Multiplied by Correlated Slashing Across Multiple AVSs

The concept of restaking in crypto allows validators to reuse already-staked ETH to secure extra services called AVSs (Actively Validated Services) and earn additional yield without putting up new capital. EigenLayer, which opened its mainnet in June 2024, is the largest restaking protocol, with a total value locked above $20 billion at its peak.

When you restake through EigenLayer, you don't personally secure an AVS; instead, you delegate that decision to an operator, who chooses which AVSs to opt into on your behalf. Real AVSs on EigenLayer today include EigenDA, a data availability layer, and Lagrange, which provides zero-knowledge proving infrastructure.

The problem with restaking is that it multiplies slashing risk. If your operator's single set of validator keys fails or gets hacked, the fault isn't isolated to one job; instead, it can trigger slashing conditions on multiple AVSs simultaneously due to correlated slashing across AVSs. EigenLayer turned on programmatic slashing in April 2025, making this risk a reality.

Liquid restaking tokens, such as those issued by Ether.fi and Renzo, let retail holders earn restaking yield without running a node. However, these tokens bundle operator and AVS risk that most holders don't actually see, and if a correlated slashing event hits one of the operators in the pool, the loss gets socialized across everyone holding the token.