Eigenlayer: On Liquid Restaking: Risks & Considerations

Eigen Labs warns that liquid restaking tokens (LRTs) add complexity and risk to EigenLayer restaking, and urges users to assess these risks before participating. The post highlights two risks: financialization through recursive borrowing, called "looping," which creates leverage that can amplify losses, and a lack of liquidity. Some liquid restaking protocols do not yet offer unstaking, and their withdrawal policies are unclear, while EigenLayer contracts allow restakers to withdraw with a known one-week delay. Users forced to sell LRTs on thinly traded markets could push prices below ETH, with knock-on effects in DeFi.