Haven1 highlights lack of understanding as the primary risk in Ether restakings asset looping

Investors have raised concerns about the emerging Ether restaking protocols, which promise double-digit passive returns but also pose economic sustainability and security risks. Jeff Owens, the co-founder and CEO of Haven1, believes that the biggest risk associated with Ether restaking is not the technical complexity but rather the lack of investor understanding. He emphasizes the importance of investors comprehending the risks involved in asset looping, a process in which traders deploy their capital into multiple protocols. This is made possible by liquid staking, which provides investors with a copy of the underlying Ether token that can be utilized in other decentralized finance (DeFi) protocols. Haven1, an Ethereum Virtual Machine-compatible layer-1 blockchain platform, has recently introduced its own liquid staking token called hsETH.
Liquid staking has become a popular choice among crypto investors due to its ability to enhance capital efficiency. Unlike regular staking protocols, it allows for the redeployment of staked assets. With a combined total value locked (TVL) of over $51.1 billion, liquid staking is currently the largest protocol category, surpassing the lending market’s cumulative TVL of $32 billion, as reported by DefiLlama. Despite being a “robust financial tool,” Owens advises investors to understand the number of loops they are adding to their assets when engaging in Ether restaking.
Haven1’s restaking portal offers investors an attractive yield of up to 25.24% annual percentage rate (APR), on top of the existing 3.24% Ether restaking APR. Although this offering raised concerns due to its higher yield compared to Anchor Protocol’s 20% yield on TerraUSD (UST) before Terra’s collapse in May 2022, Owens assures investors that there is no need to worry about a similar meltdown. The 25% yield provided by hsETH is a “pre-mainnet incentive mechanism” from Haven1, which will be adjusted based on supply and demand over time. To further ensure the safety of its restaking ecosystem, Haven1 has established a reserve fund consisting of 10% of all application fees earned through the network.