The leading staking service provider Ether.fi announced this week that it is restructuring its core product, weETH, by removing the restaking function from the token. Under this new structure, weETH will only earn standard Ethereum staking yields. To access the additional rewards from restaking, users will need to hold the newly launched weETHs token.
Ether.fi currently manages approximately $3.55 billion in customer deposits, making it one of the largest staking services in the crypto space. Staking involves locking up Ether to participate in the Ethereum network's operations in exchange for yield. Restaking, however, reuses the same Ether to provide security for other services, generating extra returns. The trade-off is that holders face dual slashing risk—a penalty on a portion of their staked assets if an error occurs in either system.
Previously, holders of weETH were exposed to both types of risk, whether they wanted the extra risk or not. Following the split, users can now make a clear choice between basic staking and restaking, based on their own goals.
Ether.fi currently generates roughly $223 million in annualized fee revenue, with annualized revenue of about $51 million. In the second quarter of this year, the company booked $41 million in gross revenue, and after deducting rewards and other costs, it posted a net profit of nearly $10 million. The value distributed to ETHFI token holders through buybacks was only $30,000.
This product restructuring comes at a time when the Ethereum staking economic model is facing significant controversy. This week, a group of researchers, including a fellow from the Ethereum Foundation, proposed a plan to stop issuing rewards to stakers once the total amount of Ether staked reaches half of the total supply. Under the current system, staking yields never fall to zero, regardless of how high the staking volume is, which creates a constant incentive to stake. The researchers argue this could lead to Ether being concentrated in the hands of a few large custodians.
The proposal suggests gradually reducing the reward share so that staking returns disappear entirely when the total staked volume reaches approximately 60 million ETH. Currently, the total amount staked across the network is about one-third of the total supply.
Ether.fi founder Mike Silagadze has been critical of the proposal, arguing that it would squeeze out smaller stakers and undermine the business model of products built on staking rewards—including his own. The debate over Ethereum's staking economic model continues, with clear divisions among various parties.
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