Restaking allows institutional traders to better configure, quantify, and diversify risk across decentralized finance (DeFi) protocols. It creates a second validation layer, strengthening middleware like oracles and bridges while aligning economic incentives across decentralized systems. This modular security stack lets traders customize slashing conditions, transforming slashing from unpredictable risk into measurable liabilities, akin to default risk in fixed-income markets. Restaking also facilitates exposure diversification across protocols, making it harder for network-level attacks and enhancing the credibility of oracle feeds. As risk assessment improves, institutions may become more inclined to participate in DeFi. This evolution signifies a shift from viewing DeFi as a complex ecosystem to one with structured security measures suitable for institutional investment, potentially bridging the gap between decentralized and traditional finance.

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