The memo
REJECTED for this client. ~$3.8B and the deepest liquidity of any liquid restaking token, accepted as collateral on more venues than its peers — so this is not a quality judgement on ether.fi, which is the best-executed LRT. The rejection is about what restaking IS. weETH stakes ETH, then re-pledges that same stake to secure EigenLayer AVSs, which pay 1-3% extra. Those AVSs can slash. If an operator is slashed on Ethereum and on an AVS in the same incident, the losses COMPOUND. Worse, the risk is systemic rather than idiosyncratic: billions of restaked ETH sit behind a handful of LRTs whose governance chooses which AVSs to opt into, and those same LRTs are collateral in lending markets — so a bad slashing event propagates into liquidations elsewhere. That is a novel, correlated risk that has not yet been tested by a real slashing event at scale. Being paid 1-3% to accept an unmodelled correlated risk is not a trade we make on a client's behalf. Revisit after the first significant slashing event shows how the system actually behaves — the price of information here is someone else's capital, and that is fine.
What would reopen the file
- n/a — rejected; revisit after a real AVS slashing event
Facts on file
- Verdict
- Rejected
- Exposure
- ETH staking
- Chains examined
- Ethereum
- Memo version
- v1
- Reviewed
- Next review