eETH, the highly-anticipated liquid staking token from EtherFi, is now stay on Ethereum’s Goerli testnet forward of its Nov. 6 mainnet launch.

Liquid staking tokens (LSTs) enable holders to entry publicity to staking rewards with out working a node, and can be utilized in DeFi protocols to generate additional yields. eETH differentiates itself from opponents by additionally providing holders publicity to restaking yields by way of EigenLayer.

“Staking with eETH on EtherFi mechanically restakes on EigenLayer and accrues staking rewards whereas permitting customers to make use of eETH in different DeFi protocols,” EtherFi mentioned. “No different liquid staking protocol has this functionality.”

EtherFi added that its technical structure makes use of sharding to make sure that stakers retain management over their keys, whereas node operators generate the keys for rival LST protocols.

Lido faces new competitors

eETH’s impending mainnet launch comes as Lido, the highest LST supplier, is going through growing criticism over refusing to self-limit its staking.

In line with Dune Analytics, Lido’s validators management 31.6% of staked Ether’s provide. Danny Ryan of the Ethereum Basis lately warned that any singular entity amassing a 3rd of Staked Ether poses “a systemic risk to Ethereum.”

“At a 3rd, if somebody served these three operators at Lido… and so they say ‘shut it down’, then we’ve a problem with liveness,” Ryan mentioned. “It is the place we start to probably have points.”

On Oct. 13, EtherFi introduced it is going to implement measures to self-limit its staking dominance at 25% of each the staked Ether’s provide and Ethereum’s validator headcount into the protocol’s good contracts. EtherFi has attracted round 18,000 ETH since starting its staged rollout in April.

“We expect it is irresponsible to not decide to self-limiting,” Mike Silagadze, the founder and CEO of EtherFi, advised The Defiant.

Lido’s dominance is down from 32.5% in early September.

EigenLayer

EtherFi is betting that providing native restaking yields by way of EigenLayer will entice customers away from LST incumbents.

EigenLayer permits stakers and LST holders to earn further income by securing an Actively Validated Service (AVS) module.

Whereas Ethereum validators course of transactions written within the Solidity programming language for the Ethereum Digital Machine (EVM), EigenLayer leverages Ethereum’s staking layer to validate non-EVM code by way of its AVS modules.

In a latest look on The Defiant Podcast, Sreeram Kannan, EigenLayer’s founder, mentioned the protocol is suited to “something that requires a decentralized validation community,” resembling Layer 1 blockchains, DeFi protocols, or different web3 providers.

“Restaking has the facility to increase the Ethereum belief layer and assist the community with decentralization and worth accrual,” EtherFi mentioned.

Restaking Dangers

Whereas restaking affords further rewards to customers, the chance for additional income comes with heightened good contract and slashing dangers.

Eigenlayer customers who safe an AVS operator that misbehaves will face slashing penalties, that means they might lose a portion of their staked Ether because of the actions of third-party entities. Restakers additionally face slashing penalties in the event that they fail to validate their chosen AVS modules.

“Staking introduces each slashing and extra good contract danger to stakers so it’s one thing customers ought to think about.” Silagadze mentioned. “To date, ETH staking slashing danger has been very near zero, however this isn’t essentially going to be the case with restaking providers. EtherFi will use protocol governance to find out which providers to assist and assist mitigate the chance.”

Silagadze added that EtherFi may additionally introduce an LST that doesn’t assist restaking sooner or later.

The staff additionally mentioned it’s partnering with outstanding DeFi protocols together with Balancer, Aura, and Pendle to make sure the eETH token affords DeFi utility at mainnet launch.