stETH Restaking: Liquid vs Locked (Pros & Cons)

When holding Ethereum (ETH) and wanting to earn rewards, you’ve likely run into two terms: liquid staking and locked staking. But there’s a newer concept gaining traction—restaking. 

In this article we’ll explore liquid staking ETH, the difference between restaking with no lock-up, the comparison of stETH vs locked, and the yield implications of liquid restaking using tools like stETH.

What is Liquid Staking vs Locked Staking?

Locked staking is the old-school model: you commit your ETH for a defined period (or indefinitely) to support the network’s Proof of Stake (PoS) consensus and you receive staking rewards in return. 

The drawback is your funds may be inaccessible for a while and can’t be freely used in other protocols.

Liquid staking changes that dynamic. With liquid staking you deposit ETH into a staking provider and receive a derivative token—commonly called a Liquid Staking Token (LST), such as stETH on Lido DAO. 

The original ETH remains staked, earning network rewards, while your derivative token remains tradable or usable in DeFi applications.

Enter Restaking: What Does “No Lockup” Really Mean?

Restaking takes the concept further: once you have an LST like stETH, you can then restake it (or its representation) into another layer of services—commonly called Actively Validated Services (AVSs)—to earn extra yield beyond base staking. This expansion is often called liquid restaking. 

“No lockup” in this context means your original staking position isn’t locked in additional binding contracts—you receive a liquid token (or restaked derivative) that remains usable in DeFi. 

This allows dual-use of your staked capital: you earn the staking reward and you can deploy your derivative for extra yield or liquidity.

stETH (Liquid) vs Locked ETH – The Comparison

When you stake ETH via Lido, you receive stETH. The advantages:

• You don’t need the 32 ETH minimum that native staking demands.

• Your stake continues earning ETH network rewards, and you can use stETH in DeFi.

• You retain liquidity because stETH is tradable and can act as collateral.
  
   

However, the “locked” staking model has its merits: you’re directly supporting network security, lower layering means simpler risk-profile (no derivative tokens), and there’s fewer moving parts.

One key trade-off: stETH may trade at a discount or premium relative to ETH, especially during stressed market conditions. Because it relies on the staking provider’s mechanisms and liquidity to redeem, divergence from ETH value can occur. 

Pros & Cons of Restaking with stETH

Pros:

• Capital Efficiency: With liquid restaking, you’re making your stake do “double duty” by earning base rewards + auxiliary protocol rewards.

• Liquidity: Your derivative tokens remain usable, so you’re not sacrificing access while you earn.

• Yield Potential: Active restaking positions can access higher yields than simple staking alone.

Cons:

• Complexity: Restaking introduces more layers—your position may span staking provider risks + restaking protocol risks.

• Smart Contract & Slashing Risk: Because you’re exposed to more protocols, the risk of bug/hack/slash increases.

• Liquidity/Redeem Risk: If derivative tokens lose peg or liquidity dries up, redeeming back to base ETH may incur losses.

• Centralization & Governance Risks: Some providers dominate staking share, which may attract regulatory or protocol concerns.

Locked Staking: Pros & Cons

Pros:

• Simplicity and Transparency: Fewer abstraction layers, fewer moving parts.

• Reduced Derivative Risk: You’re directly participating in the staking network, so no tradable derivative tokens complicate value.

Cons:

• Illiquidity: You may be unable to withdraw or trade your stake for a period.

• Opportunity Cost: You can’t use that staked ETH for DeFi while it’s locked.

• Lower Utility: Locked ETH can’t participate in secondary yield strategies like tokenized derivatives.

Read also : How to Earn Passive Income from Crypto Staking While Supporting the Blockchain

Which Model Works for You?

If you prefer safety, transparency, and fewer variables, locked or traditional staking may suit you. You commit your ETH, expect predictable rewards, and accept less flexibility.

If you value flexibility, utility, and are comfortable with layered protocols, liquid staking (with stETH) or liquid restaking could be more attractive. 

For example: stake ETH → receive stETH → deploy stETH into a restaking protocol to earn extra yield. That said, you must manage the incremental risks.

Ultimately your choice depends on your risk tolerance, liquidity needs, and investment strategy. 

In 2025’s evolving DeFi ecosystem, many users will likely blend both approaches: hold some ETH in locked staking for stability, some in liquid staking for flexibility, and a smaller portion in restaking for yield experimentation.

Discover in-depth articles, expert analysis, and the latest market trends on Bitrue’s blog.

Ready to take your crypto journey to the next step? Register now to Bitrue

FAQs

What is liquid staking ETH?

Liquid staking allows ETH holders to stake their tokens and receive a liquid derivative (LST) like stETH that they can trade or use in DeFi while still earning staking rewards.

How does restaking differ from liquid staking?

Restaking takes your LST (or staked ETH) and uses it to secure additional protocols (AVSs), allowing for extra yield; liquid staking just provides liquidity of your staked assets without that extra layer.

What is stETH vs locked ETH?

stETH is a token representing your staked ETH plus accruing rewards and usable in DeFi; locked ETH means you’ve staked directly and cannot freely use or trade your stake until unstaking or redemption.

Are there risks with liquid restaking?

Yes—risks include smart contract failures, token depegging, liquidity shortfalls, and increased complexity due to layered protocols.

Does liquid restaking require lock-up of assets?

Generally no. The idea is your derivative token remains usable (tradable or deployable in DeFi) rather than being locked entirely, though you are still exposed to fluctuations in value and redemption conditions.