FAQ

What is Restaking?

Stakers contribute economic security to the network and earn additional rewards with their capital. By restaking, this security is enhanced, enabling developers to utilize this network of trust more effectively.

As a user, you first stake your BTC to earn the base yield for securing the network. Subsequently, you can opt for additional commitments using the same stake. However, any malicious behavior can lead to slashing, resulting in the loss of a portion of your stake. These additional services are known as Actively Validated Services (AVS).

AVSs also establish an "unbonding period," which prevents malicious actors from quickly unstaking and withdrawing funds before penalties are enforced. After unstaking, you must wait through the unbonding period before you can withdraw your funds.

What are the risks involved in restaking in AVSs?

Slashing: Restaking involves committing your already-staked funds to additional services. This means that if you misbehave or fail to meet the requirements of any of the services you're restaking with, your initial stake can be slashed (penalized). This increases the potential loss compared to regular staking.

Smart Contract Risk: Restaking platforms and the Actively Validated Services (AVSs) you engage with rely on smart contracts. Vulnerabilities or bugs in these contracts can result in the loss of funds, even if you haven't done anything wrong. Pell's Restaking contract has successfully passed the audit conducted by a professional organization. You can view the detailed report at here.

Liquidity Risk: Restaking often entails longer lockup periods (unbonding periods) before you can withdraw your stake. Consequently, your funds become less liquid and might be inaccessible during market volatility or if you need them urgently.