A Liquid Restaking Token (LRT) is a token a user receives when they deposit ETH into a liquid restaking protocol. The protocol takes the ETH, stakes it as an Ethereum validator, and simultaneously restakes it on EigenLayer — then issues the LRT as a liquid representation of the combined position. The token can be freely traded, transferred, or used as DeFi collateral, making the restaked ETH position accessible rather than locked. LRTs emerged in late 2023 as a category following EigenLayer’s launch, and by mid-2024 the top LRTs (eETH, ezETH, rsETH) had accumulated $10B+ in TVL.
Background: Restaking
To understand LRTs, you need the context of EigenLayer restaking:
Ethereum staking (base layer):
- Deposit 32 ETH to run a validator
- Earn ~4% APY from consensus rewards + priority fees
- ETH is locked; cannot be used elsewhere during staking
Liquid staking tokens (LSTs):
- Lido’s stETH, Rocket Pool’s rETH, etc.
- Deposit ETH → receive an LST representing your staked position
- LST is liquid and DeFi-composable; earns staking yield passively
Restaking (EigenLayer):
- Take your staked ETH and “restake” it as economic security for additional services (AVSes)
- Your ETH now secures both Ethereum AND third-party services
- Additional yield in exchange for additional slashing risk
LRTs = LST + Restaking, liquid:
- Deposit ETH → protocol stakes + restakes on EigenLayer → issues LRT
- LRT earns: base staking rewards + EigenLayer AVS rewards
- LRT is liquid and usable in DeFi
Risk Profile of LRTs
LRTs carry more complex risk than LSTs:
Standard LST risks:
- Smart contract bug in staking protocol
- Validator slashing (missing attestations, double-signing)
- Liquidity risk: depeg from ETH if mass selling
Additional LRT risks:
- EigenLayer AVS slash risk: If an AVS (application layer) misbehaves and gets slashed, your restaked ETH is cut
- Multiple operator risk: Your ETH may be restaked across multiple operators — each is an independent slashing risk
- Smart contract complexity: More contracts = larger attack surface (LST protocol + EigenLayer + LRT wrapper)
- Points-to-reward conversion: Many LRT yields assumed EigenLayer AVS rewards; until AVSes launch and pay out real yield, LRT “restaking yield” is speculative
LRT Ecosystem (2024)
| Token | Protocol | Network | TVL (peak 2024) |
|---|---|---|---|
| eETH / weETH | EtherFi | Ethereum | $6B+ |
| ezETH | Renzo | Ethereum/L2s | $3B+ |
| rsETH | KelpDAO | Ethereum | $2B+ |
| pufETH | Puffer Finance | Ethereum | $1.5B+ |
| swETH/rswETH | Swell | Ethereum | $1B+ |
| mETH | Mantle | Mantle L2 | $500M+ |
Note: TVLs dropped significantly after EigenLayer season 2 airdrop and AVS launch (mid-2024) as users exited high-risk positions post-airdrop.
LRT Depegs
The Renzo ezETH depeg (April 2024):
- Renzo announced its tokenomics for the REZ airdrop
- Community perceived the allocation as heavily team/investor-weighted
- ezETH depegged from ETH: dropped from 1:1 to ~0.9 briefly on Uniswap
- Users who had borrowed USDC against ezETH as collateral faced margin calls
- The cascade: depeg → liquidations → more selling → deeper depeg
- Resolved within hours as liquidity returned; REZ launched at high FDV
This event demonstrated the systemic risk of LRTs as DeFi collateral: a perception-driven depeg in one LRT can trigger cascading liquidations across lending protocols that accept it.
LRTs vs. LSTs at a Glance
| Property | LST (e.g., stETH) | LRT (e.g., eETH) |
|---|---|---|
| Yield sources | ETH staking only | ETH staking + EigenLayer AVSes |
| Slashing risk | Ethereum validator only | Ethereum + AVS slashing |
| Smart contract depth | 1-2 contracts | 3-5+ contracts |
| DeFi composability | Widely integrated | Narrower (newer) |
| Trust assumptions | Single protocol | Multiple (LST + EigenLayer + LRT) |
Points and Airdrops Meta
LRTs drove the dominant DeFi narrative in early 2024:
- Holding LRTs accumulated points from both the LRT protocol (loyalty points → LRT token airdrop) AND EigenLayer (restaking points → EIGEN airdrop)
- DeFi “degen” strategy: deposit LRT into Pendle for YT (yield tokens) to get amplified points exposure
- The cascade: ETH → weETH → Pendle YT-weETH → multiple protocol points simultaneously
- Result: EtherFi ETHFI airdrop (March 2024) + EigenLayer EIGEN airdrop + Renzo REZ airdrop + KelpDAO KARAK + etc.
This created a “restaking points meta” that drove billions into LRTs during Q1-Q2 2024, followed by TVL decline as airdrops resolved.
How to Get LRTs
- Choose an LRT protocol (EtherFi, Renzo, KelpDAO, etc.)
- Visit their app and deposit ETH
- Receive LRT (eETH, ezETH, rsETH, etc.)
- Optionally: Wrap to non-rebasing version (weETH from EtherFi) for DeFi use
- Deploy as DeFi collateral (Aave, Morpho, Pendle)
Important: Understand the risks before depositing — LRTs have more complexity than LSTs.
Acquire ETH via . Secure your ETH with before staking.
Social Media Sentiment
LRTs dominated Crypto Twitter in early 2024 as the dominant DeFi meta. The points + airdrop compounding strategy was widely discussed and generated significant returns for early participants. Post-airdrop, the narrative shifted: many participants exited, TVLs dropped, and genuine AVS yield (the core LRT value proposition) proved slow to materialize. The ezETH depeg event is frequently cited as a canary-in-the-coalmine for systemic LRT risk. Research from academics and risk firms like Gauntlet highlighted the liquidation cascade risk from LRTs as widely-used DeFi collateral. Long-term, the LRT category’s viability depends on EigenLayer AVS economics delivering real yield — a question still open as of 2025.
Last updated: 2026-04
Related Terms
Sources
EigenLabs Research. (2023). EigenLayer: The Restaking Collective. eigenlayer.xyz.
Leshner, R., & Hayes, G. (2019). Compound: The Money Market Protocol. compound.finance.
Werner, S. M., Perez, D., Gudgeon, L., Klages-Mundt, A., Harz, D., & Gervais, A. (2022). SoK: Decentralized Finance (DeFi). ACM CCS.
Klages-Mundt, A., Harz, D., Gudgeon, L., Liu, J. Y., & Minca, A. (2020). Stablecoins 2.0: Economic Foundations and Risk-Based Models. ACM CCS.
Angeris, G., Kao, H. T., Chiang, R., Noyes, C., & Chitra, T. (2019). An Analysis of Uniswap Markets. Stanford/Gauntlet.