Liquid Restaking Tokens (LRTs)

EtherFi, Renzo, Kelp DAO, Puffer, Eigenpie — the protocols that wrap restaked positions into liquid tokens. How they work, how Renzo's ezETH depegged in April 2024, and the leverage stacks built on LRT collateral.

30 min · advanced · part of Restaking & Shared Security

What an LRT Is

A Liquid Restaking Token is to restaking what stETH is to plain staking. Instead of depositing into EigenLayer directly — which requires choosing an operator, accepting illiquidity during the withdrawal window, and bearing operator-specific risk yourself — you deposit into an LRT protocol. The LRT protocol pools deposits, delegates them across many operators, and issues you a transferable ERC-20 token that represents your share of the restaked basket. The advantages: your position is liquid (you can sell the LRT on a DEX without waiting for the EigenLayer withdrawal queue), professionally managed (the LRT protocol does operator selection and AVS curation for you), and composable (other DeFi protocols accept LRTs as collateral, enabling leverage and yield strategies). The risks: you now bear additional smart-contract risk from the LRT protocol, the LRT can de-peg if redemption confidence is lost, and the entire stack — restaked ETH plus LRT plus DeFi leverage on top — becomes opaque and correlated. The April 2024 Renzo ezETH de-peg was the first time the ecosystem watched these risks materialize at scale. This lesson covers the major LRT protocols, the de-peg mechanics, and how LRT collateral is used elsewhere in DeFi.

Also in this lesson

The Major LRT Protocols
The Renzo ezETH Depeg, April 24, 2024
Leverage Stacks on LRTs
Other LRT Failure Modes

Key terms

LRT (Liquid Restaking Token): A transferable token representing a share of a pooled restaking position. Examples: weETH (EtherFi), ezETH (Renzo), rsETH (Kelp), pufETH (Puffer). LRTs make restaking liquid and composable but add smart-contract and de-peg risk.
EtherFi (eETH, weETH, ETHFI): The largest LRT protocol by sustained TVL. Non-custodial design with stakers controlling validator keys. eETH is rebasing, weETH is non-rebasing for DeFi, ETHFI is governance.
Renzo (ezETH, REZ): LRT protocol whose ezETH token depegged sharply on April 24, 2024 after a disappointing REZ airdrop triggered points-farmer exits. The canonical LRT de-peg case study.
Kelp DAO (rsETH): Multi-LST liquid restaking protocol; rsETH is the receipt token. Curates a portfolio of AVS exposures across multiple underlying LSTs.
Puffer (pufETH): LRT protocol differentiated by anti-slashing hardware modules (Secure-Signer) that mechanically prevent double-signing for solo validators, reducing slashing risk for participants.
Eigenpie / Magpie: Multi-LST liquid restaking aggregator from the Magpie ecosystem. Issues per-LST receipt tokens and integrates with Pendle/Magpie yield-trading.
ezETH depeg: The April 24, 2024 event when Renzo's ezETH token traded as low as ~0.7 ETH on secondary markets following points-farmer exits and leveraged-position liquidations. Recovered to near 1:1 within days but liquidated many leveraged Aave positions in between.
Looping (LRT leverage): Strategy of depositing LRT as collateral, borrowing ETH against it, swapping the borrowed ETH back into LRT, and repeating — amplifying both yield and risk by 3-4x typically.
Redemption-rate oracle: An LRT pricing method that values the token at its underlying redemption value rather than its secondary-market price. Lending markets using redemption oracles survived the ezETH de-peg better than those using market-price oracles.
Pendle YT (yield tokens): Pendle Finance product that separates the yield/points component of an LRT from its principal. Allowed concentrated points exposure during 2024 LRT campaigns and drove a large share of LRT TVL.

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Educational only — not financial advice.