Rewards

Participating in restaking generates rewards in a number of forms outlined below. When rewards are received by the RewardDistributor contract in a form other than ETH, Rio first converts them into ETH using a protocol like Milkman, then diverts a fee to the RioDAO and Operators. The remaining ETH is sent directly to the deposit pool without minting additional reETH, thereby increasing the ETH value of each reETH share of the underlying pool.

Rio does not use any rebasing mechanisms, and the value of reETH will increase with reward inflows.

EigenLayer Rewards and EigenLayer Points

As of the time of writing, there are limited details on the rewards available to those who participate in EigenLayer.

The EigenLayer Stage 1 launch provides points on a basis of 1 point per ETH per hour. These points require no further action beyond restaking to EigenLayer. They will be passed on to users who restake through Rio.

Native Staking Rewards

When ETH is deposited into the reETH vault, it is natively restaked to EigenLayer. As a result, it accrues native staking ETH penalties and rewards for validating the Ethereum network directly.

All these rewards are paid in the form of ETH directly to validators, and will be periodically skimmed and distributed as described above.

Consensus Layer Rewards

Consensus layer rewards are predictable and come from the ongoing validation of the Ethereum network. Every 12 seconds, a random validator is tasked with proposing a block while the rest of the network is tasked with attesting to its validity. Attesting to these blocks will earn small "attestation rewards" over time. In addition, the validator that proposes the block earns a "block proposer reward," though this happens infrequently to individual validators.

Finally, after every 256 epochs (where each epoch is 32 blocks), 512 random validators are selected to participate in a synch committee, earning "sync committee rewards."

These rewards are independent of the network activity.

Execution Layer Rewards

When a validator is selected to propose a block, it is allowed to select which transactions will be included, and which order they are executed in. In order to ensure that transactions get included in the blockchain, each transaction on the network includes a "priority fee" that is payed to the proposer for including the transaction in their block.

To obtain the Maximal Extractable Value (MEV) from a block, the block builder can choose to auction block space to block builders in a competitive marketplace with software like MEV boost, further increasing potential rewards.

These fees depend heavily on the network activity at the time a block is proposed and can only be collected very rarely but represent a significant boost over typical rewards.