Ether.fi’s weETH token has officially split from restaking activities, creating a new token, weETHs, for higher-risk restaking exposure. fi, one of the largest staking businesses in the cryptocurrency space, announced Thursday its flagship Ethereum staking token weETH has officially split from restaking activities. This strategic move creates a new, separate token, weETHs, specifically for higher-risk restaking exposure, giving users a clearer choice in how they participate in the Ethereum ecosystem.
The decision, made public on August 7, 2026, comes as a significant debate unfolds among Ethereum researchers over a proposal to drastically cut validator rewards. Ether.fi founder Mike Silagadze has publicly criticized this proposal, arguing it could disadvantage smaller stakers and impact products reliant on staking yields.
Ether.fi unbundles staking and restaking exposure
Previously, holding weETH meant exposure to both ordinary Ethereum staking rewards and the additional, often higher-yield, but also higher-risk, world of restaking. This bundled approach meant that all weETH holders were subject to potential penalties from both systems.
With this unbundling, weETH is now a pure liquid staking token (LST), solely earning standard Ethereum staking rewards. For those seeking the amplified returns and increased risks associated with restaking, the newly introduced weETHs token offers that specific exposure.
This separation aims to simplify Ether.fi’s product stack and provide greater transparency for its user base, which currently accounts for approximately $3.3 billion in customer deposits, according to DefiLlama. The protocol’s deposits peaked at $12.43 billion in August 2025, highlighting its substantial presence in the staking sector.
Ether.fi also confirmed its plans for a full exit from EigenLayer, a prominent restaking protocol, by the third quarter of 2026. The wind-down of restaked assets had already occurred on-chain prior to this week’s announcement, with EigenPod withdrawal credentials slated for complete removal by the fourth quarter of 2026.
The new weETHs token is built on Symbiotic, another restaking platform. As of now, the supply of weETHs stands at 9,136 tokens, valued at roughly $18 million, representing a small fraction—about half a percent—of Ether.fi’s overall staking base.
Ethereum’s heated reward debate
The timing of Ether.fi’s strategic pivot isn’t coincidental; it directly intersects with a contentious discussion within the Ethereum research community. A group of developers, including one from the Ethereum Foundation, recently proposed a mechanism to reduce staking rewards significantly.
Their proposal, known as EIP-8361, suggests that Ethereum should stop paying validators once approximately half of all ether (ETH) is locked up. Currently, validator rewards never fall to zero, regardless of the amount staked, which critics argue incentivizes an overconcentration of ETH with large custodians.
The proposed fix would gradually destroy a growing share of rewards until payments cease entirely at around 60.25 million ETH staked. This would reduce the consensus staking yield from about 2.6% to 1.2%, a considerable 54% cut.
About one-third of the total ETH supply is staked today, with projections indicating it could exceed 70 million ETH by January 1, 2028, if the validator entry queue remains saturated.
Ether.fi founder Mike Silagadze has emerged as a vocal critic of EIP-8361. He argues that such a drastic reduction in rewards would disproportionately affect smaller stakers and undermine the viability of products, like his own, that are built upon staking rewards.
Financial implications for the staking ecosystem
This proposal has far-reaching financial implications for the entire Ethereum staking ecosystem. The current unlevered spread, which is the difference between the consensus yield and the WETH borrow rate, sits at roughly +1.1 percentage points (2.6% yield minus ~1.5% borrow rate).
If EIP-8361 were implemented, this spread would turn negative by approximately 0.3 percentage points, posing significant challenges for stakers and staking service providers. Such a shift could reshape the competitive landscape, potentially consolidating power among larger entities better equipped to absorb reduced margins.
Ether.fi itself demonstrates the scale of operations in this sector, having captured roughly $223 million in annualized fees and about $51 million in annualized revenue. In the second quarter of this year, the platform reported $41 million in gross revenue, with nearly $10 million in earnings after accounting for rewards and other operational costs.
The distribution of value to ETHFI holders through buybacks, however, stood at only $30,000, underscoring the complexities of tokenomics and value accrual within these protocols.
The evolving landscape of restaking
Ether.fi’s decision to unbundle weETH also reflects a broader reassessment within the restaking sector. The concept of restaking, which allows staked ETH to be reused to secure other decentralized applications for additional yield, has seen explosive growth but also increased scrutiny regarding its inherent risks.
Market data shows a cooling trend in the sector. Liquid restaking deposits across the industry peaked at $18.3 billion in December 2024, but have since seen a decline. Similarly, EigenCloud, a key player in the restaking space, held $5.10 billion as of today, down from its peak of $22.06 billion on August 14, 2025.
Symbiotic, the platform now hosting weETHs, has also experienced a reduction in its holdings, dropping to $342.8 million from a peak of $2.70 billion in December 2024. These figures suggest a market maturing and perhaps adjusting to the realities of double-layered risks and the sustainability of high yields.
By creating a clear distinction between pure staking and restaking, Ether.fi offers its users a more transparent risk profile, aligning with a growing industry emphasis on explicit risk management. This move allows individual participants to tailor their exposure more precisely, rather than having it pre-packaged, a change that could set a precedent for other protocols in the evolving Ethereum ecosystem.