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Why has the yield balance broken down?

Restaking went from a fast-growing sector in 2024 to a profitability squeeze in 2026. ether.fi plans to remove the final structural link between its staking tokens and EigenLayer by the end of this quarter; company documents show that as of August, less than 1% of assets were still held in that setup.

When the company launched in 2024, it automatically restaked deposited ETH on EigenLayer. But in August, restaking was removed from weETH, the liquid token used as collateral in DeFi and the circulating version of the asset; users who still want to restake are now directed to a separate token built on rival platform Symbiotic. Management said the move was driven by weaker extra-yield opportunities and rising risk perceptions.

What do the market figures show?

In the first six weeks of 2024, liquid restaking tokens grew by more than 1,000%, while EigenLayer’s total value locked peaked at $19.7 billion. However, the fees paid by services renting this security were not enough to add a meaningful premium on top of basic staking returns.

As of September 8, DefiLlama data showed the restaking category at $10.02 billion in size and generating $99,977 in fees over the previous week. By contrast, the liquid staking category, with a market size of $51.87 billion, produced $27.35 million in fee revenue; on a per-dollar basis, traditional staking looked about 53 times more efficient.

Two other developments further weakened incentives: deposit-supporting points programs ended throughout 2025, and slashing was introduced in April 2025. That turned the risk of part of a staked ETH position being cut due to operator errors from a theoretical concern into a priced-in cost.

Falling profitability and security pressure

With ether.fi excluded, the rest of the sector looks much smaller in scale. The five largest liquid restaking protocols — Renzo, Kelp, Swell, Puffer Finance and Bedrock — generated a combined $953,350 in gross profit in the second quarter of 2026; three quarters earlier, the same group had earned $2.18 million.

  • Puffer posted $21,590 in gross profit in the same quarter.
  • Swell posted $22,370.

The financial statements also showed that the main money-maker at these firms was not restaking itself, but the ordinary staking fees underneath it. In some protocols, EIGEN rewards were booked equally in revenue and cost items, indicating that this flow did not leave additional profit inside the protocol.

On the risk side, the April 18 Kelp exploit stood out. The attacker used a cross-chain bridge vulnerability to mint about 116,500 uncollateralized rsETH in roughly 46 minutes; the tokens, worth around $293 million, were posted as collateral on Aave and then used to borrow real ether. In the following days, about $6 billion flowed out of Aave, while potential bad debt was estimated at between $123 million and $230 million.

Where are companies looking for a new revenue model?

Capital leaving restaking did not fully exit crypto lending; it shifted away from ETH-based leverage toward dollar-denominated products. In this environment, ether.fi began positioning itself not just as a staking company but as a crypto neobank, with a card, a lending market on Optimism, vaults and, added in August, tokenized shares and metals.

According to the company, the card accounted for 17% of monthly revenue in January and rose to 46% in July. DefiLlama data, meanwhile, show ether.fi’s gross profit falling from $18.71 million in the third quarter of 2025 to $9.99 million in the second quarter of 2026, down about 47%; over the same period, card fees generated $3.14 million, while EigenLayer restaking produced $2.87 million in gross profit.

That does not mean the technology is failing. EigenLayer is now highlighting verifiable compute under the EigenCloud brand, while its assets under management fell from $22.06 billion in August 2025 to $5.10 billion. The core question for the market remains unchanged: even if restaking is technically possible, can it generate enough revenue to stand as a sustainable business model on its own?

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