The State of Liquid Restaking 2025: The "Points" Hangover & The Rise of Real Yield

Section 1: Summary

In 2024, the industry was drunk on "Points." Users deposited billions into Liquid Restaking Tokens (LRTs) not because they understood the underlying security model, but because they were chasing an imaginary number on a dashboard that promised a future airdrop.

In 2025, the music stopped. The airdrops launched, the mercenaries dumped, and the "Points Era" ended with a whimper.

What emerged from the ashes is a leaner, meaner, and infinitely more robust sector. The "Post-Points" era of 2025 has been defined by one brutal metric: Real Revenue. The narrative shifted from "How many points do I get?" to "How much ETH is this AVS actually paying me?"

Our Core Thesis: The Liquid Restaking market has matured into a "Structured Product" market. The winners are no longer the protocols with the most aggressive marketing, but the ones with the best Risk-Adjusted Yield and Slashing Insurance. The "infinite leverage" game is over; the "sustainable yield" game has begun.

Section 2: The 2025 Landscape & Evaluation Criteria

The Landscape: From Speculation to Service

The macro trend of 2025 was the Operationalization of Trust.

• AVS Saturation: By Q3 2025, over 80 Actively Validated Services (AVSs) were live on EigenLayer, ranging from Oracle networks to "Restaked Rollup" sequencers.
• The Yield Compression: As more ETH flooded in, yields naturally compressed. The days of double-digit returns on plain ETH are gone. The market settled into a "Base Staking + Restaking Premium" model.
• The First Slash: In May 2025, the "Project Chimera" bridge incident (a faulty AVS) triggered the first major slashing event. While small in absolute terms (0.5% of the specific operator set), it was a wake-up call that sent shockwaves through the LRT ecosystem.

The Criteria: The "Real Yield" Scorecard

In 2024, we ranked protocols by TVL (Total Value Locked). In 2025, TVL is a metric of liability, not success. A protocol with $10B TVL and $0 revenue is a ticking time bomb.

We evaluated the winners based on:

1. Net AVS Yield: The actual ETH-denominated return paid to stakers after operator fees.
2. Slashing Resilience: Did the protocol's risk engine successfully avoid the "Project Chimera" slash? Did they have an insurance fund?
3. LRT Liquidity: Can you exit your position in size on the secondary market (Curve/Balancer) with <0.1% slippage?
4. DeFi Composability: Is the LRT accepted as collateral on Aave and Morpho?

Section 3: The Winners Circle (Detailed Analysis)

The Market Leader: Ether.fi (The "Visa" of Restaking)

Archetype: The Safe Bet / The Conglomerate. 2025 Status: Dominant. ~35% Market Share.

Ether.fi proved that "First Mover Advantage" is real if you execute flawlessly. In 2025, they transitioned from a simple restaking interface to a full-stack financial service.

• The Good: The "Cash" Card and the eETH standard. Ether.fi successfully made eETH the "Base Money" of DeFi. By integrating eETH directly into their "Cash" crypto credit card, they created a sticky loop where users spend their yield in the real world. Their "Liquid" vault automated the AVS selection process so well that it outperformed manual delegation by 15% APY.
• The Bad: Fee Creep. As they solidified their monopoly, Ether.fi increased their performance fee on AVS rewards to 15%. Users are paying a premium for the "brand safety."
• The 2025 Data Verdict: $12B TVL retained post-airdrop. Average APY of 5.8% (3.2% Staking + 2.6% Restaking), making it the "gold standard" for passive ETH hold strategies.

The Innovator: Puffer Finance (The "Tech-Native" Play)

Archetype: The Validator's Choice / The Decentralizer. 2025 Status: The Tech Leader.

While Ether.fi won the capital war, Puffer won the infrastructure war. Their pivot to UniFi (Based Rollup infrastructure) in late 2024 set them up for massive success in 2025.

• The Good: Vertical Integration. Puffer didn't just rent security; they sold it to their own Based Rollups. By controlling the sequencing layer (via UniFi), Puffer stakers captured "Pre-confirmation Tips"—a new revenue stream that didn't exist in 2024. This allowed Puffer to offer higher yields during high-volatility periods compared to generic LRTs.
• The Alpha: Anti-Slashing Tech. Puffer's use of SGX (Secure Enclaves) proved critical. During the May slashing scare, Puffer validators were mathematically prevented from signing the double-sign fault, saving their users millions.
• The Bad: Complexity. The Puffer ecosystem became difficult to understand for the average user. With "pufETH," "UniFi AVS," and "Validator Tickets," the learning curve is steep.
• 2025 Data Verdict: The highest "Real Yield" during market volatility. During the Q3 crash, Puffer nodes earned 7.2% APY due to sequencing fees.

The Specialist: EigenLayer (The "AWS" of Trust)

Archetype: The Platform / The Base Layer. 2025 Status: The Global Standard.

We cannot talk about LRTs without mentioning the mother ship. In 2025, EigenLayer stopped being a "project" and became "infrastructure."

• The Good: The EIGEN token matured into a unique "Intersubjective Work Token." It successfully handled the policing of "grey area" faults that cryptographic slashing couldn't catch. The launch of "EigenLayer permissionless token support" allowed protocols to restake not just ETH, but also stablecoins and governance tokens.
• The Bad: UX Fragmentation. Using EigenLayer directly is still a nightmare for retail. It is strictly a B2B (Business to Business) platform now. If you are interacting with EigenLayer directly in 2025, you are doing it wrong; you should be using an aggregator.
• 2025 Data Verdict: $45B Total Restaked Value. The platform generated $800M in fees for stakers in 2025, finally validating the multi-billion dollar valuation.

Section 4: The Graveyard & Critical Risks

The Graveyard: The "Points Wrappers"

The graveyard of 2025 is filled with names like KelpDAO (stagnated) and smaller forks like RestakeX (defunct).

Why did they die?

1. No Utility: Once the points stopped, they had no product. They were just a multisig wrapping ETH and taking a fee.
2. Liquidity Death Spiral: When the airdrops vested in early 2025, the withdrawal queues for these protocols stretched to 45 days. Users panicked, sold the LRTs on Curve at a 5-10% discount, and the peg never recovered.
3. Lack of AVS Expertise: They blindly opted into every AVS to show "high APY" numbers and got burned by the slashing events.

The Risks: "Correlation Cascades"

The biggest risk in 2025 is no longer "smart contract risk"—it is financial correlation. With 40% of all staked ETH now restaked, a major slashing event at the EigenLayer level could trigger a liquidation cascade in DeFi.

Key Insight: If eETH depegs due to a slash, Aave positions get liquidated. If Aave positions get liquidated, the price of ETH crashes. The "Restaking Leverage Loop" is the single biggest systemic risk to Ethereum in 2025.

Section 5: Outlook 2026

As we look toward 2026, the narrative shifts from "Restaking" to "Shared Sequencing."

The simple "Yield Farming" phase is over. The next battle is over who controls the transaction ordering for the L2 ecosystem. We predict that in 2026, the lines between "LRT Protocol" and "L2 Sequencer" will blur. Ether.fi and Puffer will effectively become the "Decentralized FB" (Flashbots) of the future.

Final Verdict: The "Free Money" era is dead. Long live the "Proof of Work" (Active Validation) era.

Next Step for Investors: Audit your LRT holdings. Check the "AVS Breakdown" on your dashboard. If your chosen protocol is delegating to >20 AVSs without a clear risk framework, you are picking up pennies in front of a steamroller. Consolidate into the market leaders (Ether.fi/Puffer) or exit to plain Staked ETH (stETH/rETH) if you cannot tolerate a 5-10% principal loss event.