In 2024, restaking emerged as a significant innovation in cryptocurrency, allowing new projects to borrow security from established staking protocols like Ethereum. By packaging staked tokens into new, liquid tokens, projects can generate additional yield for stakers. While restaking has drawn comparisons to rehypothecation, they differ fundamentally. Rehypothecation is a borrowing mechanism that amplifies risks akin to leverage, as seen in the Lehman Brothers collapse, which showcased the dangers of collateralized debt obligations. In contrast, restaking involves posting collateral without creating a lender-borrower relationship, focusing instead on guaranteeing service delivery. Restaking involves a technical rather than financial risk, as participants can face penalties for poor performance across multiple systems. Unlike rehypothecation, which can lead to significant financial consequences if defaults occur, restaking’s risks are contained within the technical scope of the staking mechanisms. Therefore, while restaking shares some risk amplification traits with rehypothecation, it does not fundamentally undermine participant security or lead to systemic financial crises. The structure of restaking should not be conflated with rehypothecation, highlighting the importance of understanding these mechanisms in the evolving crypto landscape.

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