Risks, opportunities, and news of Ether restaking: an analysis by Haven1

According to the latest news, the restaking of Ether (ETH) represents a “robust financial instrument” with the potential to offer significant returns to investors. 

However, according to Haven1, the biggest risk associated with this practice is the lack of understanding of the asset cycle. 

In other words, investors need to be aware of the number of financial loops they are adding to avoid excessive risks and optimize their investment strategies. Let’s see all the details below. 

The complexity of the asset cycle in Ether restaking: all the news 

As anticipated, the emerging Ether restaking protocols, which promise investors double-digit passive returns, are raising significant issues of economic sustainability and security. 

Jeff Owens, co-founder and CEO of Haven1, highlighted that the biggest risk associated with the restaking of Ether (ETH) is not the technical complexity, but the lack of understanding on the part of investors.

In particular, Owens emphasized the importance of understanding the risks of the asset loop in restaking protocols. The looping of assets involves traders distributing the same capital across multiple protocols. 

This is possible because liquid staking offers investors a copy of the underlying Ether token, which can be further deployed in other decentralized finance (DeFi) protocols.

Owens on the matter stated the following: 

“I hope that people start to understand that the more you make your own assets, the greater the risk. This means that all it takes is one of those layers to extract or not to contribute to the rewards, and you can have that cascading effect that diminishes with it.”

Haven1 and the liquid staking token hsETH

Haven1 is a layer-1 blockchain compatible with Ethereum Virtual Machine that has recently launched its own liquid staking token, hsETH. 

This robust financial instrument allows for greater capital efficiency compared to normal staking protocols, which do not allow the redistribution of assets in staking.

Liquid staking is the largest category of protocols, with a total value locked (TVL) combined of over 51.1 billion dollars, according to DefiLlama.

Although the restaking of Ether offers significant opportunities, Owens reiterated the need for investors to understand the number of loops they are adding to their assets: 

“There is always this concern that people receive these very robust financial instruments within cryptocurrencies and do not necessarily understand the implications, the number of loops they are adding, and the implications for their underlying asset.”

The restaking portal of Haven1 offers investors a return of up to 25.24% annual percentage rate (APR), in addition to the current Ether restaking APR of 3.24%.

This high rate is part of a “pre-mainnet incentive mechanism” of Haven1, which will adjust over time based on demand and supply. 

Distinguishing itself from the risks associated with unsustainable returns like those offered by Anchor Protocol on TerraUSD (UST) before its collapse.

To strengthen the security of its restaking ecosystem, Haven1 has created a reserve fund composed of 10% of all request fees earned through the network. This fund serves as an additional protection mechanism for investors.

In summary, while the restaking of Ether represents a significant financial opportunity, it is essential that investors understand the associated risks and take prudent measures to protect their assets.