Liquid Restaking Tokens

If you're new to Liquid Restaking Tokens (LRT), it is helpful to first understand Ethereum's Proof-of-Stake (PoS) consensus mechanism and why this is preferred over its original Proof-of-Work (PoW) architecture. After coming up to speed on PoS, dive into the original token methodology for representing stake on Ethereum, the Liquid Staking Tokens (LST).

Staking

In Ethereum's Proof-of-Stake consensus mechanism, stakers place a 32 ETH stake in a validator under the agreement that they will actively participate in the consensus process. This stake serves as collateral and can be partially or completely taken away if the validator fails to complete their duties in a process known as slashing. In return for participating properly, the user is able to earn ETH rewards.

While these rewards are attractive to users, most users don't have the knowledge or equipment required to set up and properly configure a validator to avoid slashing penalties. To allow users to participate in staking without running validators themselves, professional operators offer the service of running validators in return for a small portion of the rewards.

Any ETH placed in a validator by a user is locked there, and cannot be used elsewhere in the DeFi ecosystem. This necessitates that operators take custody of the funds and determine ways, either on or off-chain to account for user deposits. The growing trend for achieving this in a trustless way is to wrap the process in smart contracts while issuing a fungible Liquid Staking Token (LST) that represents the staked ETH and can be traded, loaned, or otherwise utilized in DeFi.

Restaking

EigenLayer takes Proof-of-Stake a step further by allowing users to "restake" assets to secure any number of additional Actively Validated Services (AVS). Like native staking, funds restaked to an AVS will act as collateral for their validation process, be subject to slashing, and generate additional rewards. And like native staking, restaking to EigenLayer locks those tokens away.

A Liquid Restaking Token is a fungible token representing assets that have been restaked on Eigenlayer to secure AVS. Like LSTs, these tokens can participate in DeFi markets.

Rio Network's Products

Rio's first LRT is Restaked Ether (reETH), representing ETH natively restaked by Rio's professional operator set to secure a risk-adjusted AVS set.