What is Liquid Restaking Token (LRT)?

Liquid restaking tokens (LRTs), akin to liquid staking tokens (LSD) on Ethereum, are tokenized representations of assets deposited on EigenLayer, effectively unlocking the liquidity that is otherwise tied up.

To learn more about Restaking, please refer to our other article: What is Restaking?

There are two types of retaking, native restaking and LST (liquid staked token) restaking. For native restaking, validators natively restaked their $ETH on the Beacon Chain of Ethereum to EigenLayer. In contrast, LST restaking allows holders of liquid staked tokens, such as stETH, to restake their assets to EigenLayer smart contracts. Native restaking is more difficult to operate for retail users as it requires running Ethereum validator nodes.

Despite these differences, both native restaking and LST restaking on EigenLayer require that the assets be deposited and locked, rendering them unavailable for other uses.

As a liquid token representation of a restaked ETH position, LRTs allow users to gain access to the base ETH staking yield plus additional AVS yield, all while keeping their position liquid instead of locking up their tokens for an extended period of time. This is attractive to users because they benefit from increased yield on their ETH while also being able to use their restaked ETH position in other DeFi protocols.