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Artemiy Parshakov, the head of staking at P2P.org, said that the fierce competition among service providers in staking had driven the adoption of restaking.
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The surge in Ethereum restaking is driven by many factors, including a decrease in the annual percentage rates (APRs) of staking, according to non-custodial staking service provider P2P.org.
Staking is the process of locking crypto in a smart contract in exchange for generating income and rewards. It is an essential part of proof-of-stake (PoS) blockchains, providing security to the network. The process often attracts investors as staking APRs are much higher than the rewards gained by keeping funds in a traditional savings account.
As decentralized finance (DeFi) evolved, the process of reusing staked tokens — which are locked and idle — to gain further rewards emerged. This is called restaking. Restaking enables stakers to use their Ether (ETH) more than once. This increases rewards and also strengthens the security of networks.
On Aug. 15, ETH’s token supply surpassed 120 million. The increase in supply was attributed to a surge in restaking. Since ETH users can restake and gain more rewards, the demand for restaking increased, further driving up the issuance of ETH.
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Restaking surge due to lower staking rates
P2P.org head of staking Artemiy Parshakov believes broader trends fuel the restaking surge. According to Parshakov, increased network participation leads to diluted individual rewards in staking and fuels anticipation for a decrease in ETH staking APR. This makes restaking an attractive solution for investors.
“The fierce competition among staking service providers, custodians and wallets to offer higher returns and unique technologies has further driven the adoption of restaking, making it a crucial strategy for optimizing returns in today’s competitive environment.”
Furthermore, Parshakov explained that restaking also allows protocols to enhance security without committing to higher operational costs and developing their own mechanisms.
Meanwhile, P2P.org senior product manager Alessandro Maci believes that the surge in ETH-based restaking is also tied to key developments in the space. He said:
“The recent surge in the Ethereum-based restaking market is closely tied to key developments, particularly the EigenLayer team’s announcement enabling the claiming of rewards on restaked assets using the EIGEN token. This has sparked increased participation and interest.”
In addition, Maci believes that the advent of the permissionless restaking protocol Symbiotic also contributed to the surge in restaking. The executive believes the protocol positioned itself as a good alternative to EigenLayer.
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This article first appeared at Cointelegraph.com News
