Kelp DAO launched rsETH as a liquid restaking token on Ethereum, competing in the increasingly crowded LRT space alongside ether.fi, Renzo, and Puffer. Kelp differentiated through broad integrations across DeFi protocols and an aggressive multi-chain strategy, deploying rsETH across Arbitrum, Optimism, Base, and other L2s to maximize the token’s utility and composability.
The rsETH token grew to significant TVL through EigenLayer’s points program, attracting users who wanted restaking exposure with maximum DeFi composability. Kelp’s integrations with lending protocols, DEXs, and yield optimizers meant rsETH holders could layer multiple yield sources on top of their restaking rewards — staking yield + restaking points + DeFi lending yield + liquidity provision fees, all from the same underlying ETH.
This yield stacking was impressive on paper but created enormous risk complexity. A user who deposited rsETH as collateral on a lending protocol to borrow stablecoins and provide liquidity on a DEX was exposed to five or six layers of smart contract risk simultaneously. Each layer was individually audited and tested, but the interaction effects between layers were largely unexplored. The restaking ecosystem’s biggest risk may not be any single protocol failing — it’s the cascading effects when protocols that are deeply interconnected experience stress simultaneously.
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