What Are Liquid Restaking Tokens (LRT)? How They Differ from LSTs
LST (Liquid Staking Token) is a "receipt" for participating in Ethereum staking, while LRT (Liquid Restaking Token) is a new "receipt" that takes that initial receipt and pledges it to secure other services. The core difference: LST earns a single yield (Ethereum staking interest), while LRT uses protocols like EigenLayer to "rehypothecate" assets in an attempt to earn multiple streams of yield.
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Step 1: Trace the logical chain from "staking" to "restaking"
Before understanding LRT, see how LST came about.
Staking ETH: You stake ETH with protocols like Lido or Rocket Pool and receive a token that represents your staking position—that's an LST, such as stETH or rETH.
LST's characteristic: It earns Ethereum staking interest (currently around 3–4%). At the same time, the stETH you hold can still be used in DeFi protocols like Curve or Aave—essentially "money making money while still being mobile."
Restaking: Protocols like EigenLayer allow you to "restake" already staked ETH or LSTs to provide economic security for external services such as cross-chain bridges, oracles, and data availability layers. These services are called AVS (Actively Validated Services).
The birth of LRT: If you participate in EigenLayer restaking directly, your assets are locked (withdrawal takes about 7 days), and you lose liquidity again. LRT protocols (e.g., eETH from Ether.fi, ezETH from Renzo) solve that problem: you deposit ETH or LST, the protocol handles the complex restaking operations on your behalf, and then issues you an LRT—your "restaking receipt"—while maintaining liquidity.
Step 2: Understand the core differences between LST and LRT
| Comparison | LST (Liquid Staking Token) | LRT (Liquid Restaking Token) |
|---|---|---|
| Underlying asset | ETH | ETH or LST |
| Yield source | Ethereum network staking rewards (consensus + execution layer) | Ethereum staking rewards + AVS service fees + protocol incentives |
| Risk exposure | Ethereum validator slashing risk | Ethereum slashing risk + slashing risk across multiple AVS + smart contract nesting risk |
| Yield certainty | Relatively stable (currently ~4–5%) | Uncertain, strongly influenced by AVS token prices and volatility |
| Management style | Passive (rewards from network rules) | Active (protocol must select AVS, manage risk strategies) |
If LST is like a money market fund, an LRT is like an actively managed fund—it allocates funds to different AVS in pursuit of higher returns, but the risk and complexity increase accordingly.
Step 3: How LRT works—using Renzo's ezETH as an example
The specific flow of an LRT protocol can be broken down into four steps:
Deposit assets: Users deposit ETH or LST (e.g., stETH) into the Renzo protocol.
Delegation and restaking: The protocol delegates the deposited assets through its node operator network to EigenLayer, securing various AVS services.
Mint LRT: The protocol mints and distributes ezETH (the LRT) to users, representing their restaking position and accumulated rewards.
DeFi usage: Users can use ezETH in other DeFi protocols while the underlying assets continue to earn staking and restaking rewards.
Note: ezETH is a reward-accumulating token (similar to cTokens), meaning its value relative to the underlying assets increases as rewards accrue, rather than the token balance itself increasing.
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Step 4: Recognize the additional risks of LRT
LRT offers higher yield, but the risk layers multiply:
Compound slashing risk: LST only bears Ethereum validator slashing risk; LRT delegates to multiple AVS on EigenLayer, each with its own slashing conditions. Triggering any one of them could result in loss of assets.
Uncertainty of AVS code and rules: Most AVS are early-stage projects, their code hasn't been battle-tested, and slashing rules may change as their business evolves.
Depeg risk: During extreme market swings, the secondary market price of LRT may deviate from its actual asset value, trading at a discount.
LRT protocols (such as Renzo) typically charge a percentage fee (e.g., 10% of restaking rewards); users should verify this in advance.
Next step
Go to the official websites of Ether.fi, Renzo, or Kelp DAO, check the assets they support and the current APY (distinguishing between "projected yield" and "actual yield"). For now, just observe—hold off on any actions, and pay special attention to explanations about "AVS strategy" and "slashing risks." Understanding LRT is far more complex than LST; start with a small test amount.
