The change clearly separates standard Ethereum staking from the additional risks tied to restaking, as a new proposal to cap validator rewards fuels debate across the staking industry.
Ether.fi, one of the largest crypto staking platforms with about $3.55 billion in deposits, has removed restaking from its flagship token, weETH. The token now reflects a straightforward staking position that earns only regular Ethereum rewards.
Users seeking higher yields must now hold a separate token, weETHs.
Staking involves locking up ether to help secure the Ethereum network in return for rewards, while restaking uses the same assets to support other protocols for additional returns.
However, this extra yield carries greater risk, as users may face penalties from both layers, raising the likelihood of losing a portion of their stake.
For existing holders, the update provides a clearer distinction between lower-risk staking and higher-risk restaking exposure. For new users, it streamlines Ether.fi’s product lineup and makes it easier to understand.
Previously, holding weETH automatically exposed users to both staking and restaking risks. Now, users can opt for weETH for standard staking or choose weETHs for higher returns with added risk.
Ether.fi generates roughly $223 million in annualized fees and about $51 million in annualized revenue. In the second quarter, it reported $41 million in gross revenue and nearly $10 million in net income after rewards and expenses, while distributing only around $30,000 to ETHFI holders through buybacks.
The shift comes as Ethereum’s staking model faces growing scrutiny.
A group of researchers, including one affiliated with the Ethereum Foundation, has proposed eliminating staking rewards once half of all ether is locked. Under the current system, rewards never fully disappear, which they argue encourages ongoing staking and concentrates holdings among large custodians.
Their proposal would gradually reduce rewards to zero when approximately 60 million ether is staked. At present, about one-third of the total supply is locked.
Ether.fi founder Mike Silagadze has opposed the idea, warning that it could push out smaller stakers and undermine staking-based products, including his own.
