Ether.fi splits restaking from weETH as $3.3B staking business pivots

Ether.fi stripped restaking exposure from weETH on Aug. 6, making the $3.3 billion token a pure staking asset and moving restaking to a weETHs token.

"An era has ended. It is unfortunate," Mike Silagadze, chief executive officer at Ether.fi, said. "Restaking seems likely to return in some form, but this time it was too early."

The change ends Ether.fi's position as the largest operator built on EigenLayer's restaking model. Data from DefiLlama show Ether.fi's staking segment at $3.3 billion, making it the biggest liquid restaking protocol. Across liquid staking and restaking combined, it ranks third after Lido and Binance staked ETH. Circulating supply of weETH is 1.72 million tokens, while weETHs supply stands at 9,136.

The split lands as Ethereum's staking economics face a debate. A group of researchers, including one from the Ethereum Foundation, proposed EIP-8363 this week to burn an increasing share of validator rewards as staking participation grows, cutting payments to zero once roughly 60 million ether is locked. Silagadze criticized the proposal, arguing it would hurt smaller stakers and products built on staking rewards.

The move gives existing holders a clearer choice between basic staking and additional restaking, which carry different risk and return profiles. Previously, weETH holders took on both staking and restaking exposure whether they wanted the extra yield or not. Restaking lets the same ether secure other services for added rewards, but doubles the ways a holder can be penalized, since a failure on either system can cost part of the deposit.

Ether.fi grew rapidly in 2024 by bundling Ethereum staking yield and EigenLayer restaking exposure into a single token. The change severs the original "EigenLayer yield plus risk" linkage, with less than 1 percent of Ether.fi assets still restaked and a plan to remove EigenPod withdrawal credentials entirely in the fourth quarter of 2026.

ETHFI Drops 3.17% as Restaking Narrative Resets

The decision also reflects growing institutional caution toward bundled restaking risk, a framework championed by Aave's risk management team. ETHFI, Ether.fi's governance token, fell 3.17 percent over seven hours to about $0.364, with a market capitalization near $346 million, as traders repriced the token after the narrative shift.

Ether.fi has captured roughly $223 million in annualized fees and about $51 million in annualized revenue. In the second quarter, it earned $41 million in gross revenue and nearly $10 million in earnings after rewards and other costs, with only $30,000 of value distributed to ETHFI holders through buybacks.

The split could dampen the liquid restaking narrative across the sector. If other protocols follow Ether.fi's risk-averse move, demand for bundled restaking tokens may fall, potentially lowering restaking yields across the LRT market and pressuring related token prices. EigenLabs, the operator of EigenLayer, and Symbiotic had not commented as of the time of writing.

This article is for informational purposes only and does not constitute investment advice.