Restaking Sector Faces Challenges as TVL Stagnates and Demand Declines

News Flash 2026-01-20 16:45

The restaking sector is experiencing a "midlife crisis" as total value locked (TVL) stagnates and demand declines. The active validation service (AVS) layer, designed to enhance security for protocols without their own validation networks, is lagging behind other infrastructure developments. Key projects like EigenDA, Cyber, and Lagrange are struggling to convert restaked security into sustainable demand, with millions of ETH locked but no significant slashing events to test security constraints. EigenDA, the largest AVS project, has over 4 million ETH in restaked assets but remains in early commercialization stages. Cyber and Lagrange face similar challenges, with high restaked asset volumes but untested security mechanisms. The restaking model's reliance on shared security is under scrutiny as the demand for new blockchains diminishes, and the concentration of validator power raises concerns about centralization and systemic risks. The sector is exploring diversification, with projects like EigenCloud expanding beyond restaking to broader decentralized computing markets. However, the restaking model's future depends on integrating with stablecoin mechanisms and bridging decentralized and traditional financial systems, amid technical and regulatory challenges.

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This content is for informational purposes only and does not constitute investment advice.

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