Kraken Unveils Ethereum Restaking Feature for Non-U.S. Users

Kraken's integration with EigenLayer allows users to earn extra rewards on already staked ETH, signaling a growing trend in decentralized finance.

Kraken, one of the world’s leading cryptocurrency exchanges, has introduced Ethereum restaking via the EigenLayer protocol for its non-U.S. customers. This new offering enables users to earn additional rewards on their already staked Ethereum (ETH) by providing security to decentralized applications (dApps) built on the EigenLayer network.

Restaking, a rising trend in decentralized finance (DeFi), allows stakers to further utilize their assets by providing security across multiple protocols without unstaking from the primary Ethereum blockchain. This innovative model offers the potential for users to increase their overall yield while contributing to the broader DeFi ecosystem’s security.

The launch of restaking on Kraken comes amid significant growth in the sector. According to data from DefiLlama, the total value locked in liquid restaking tokens has surged by more than 3000% this year, reaching a staggering $11 billion. This explosion in value underscores the increasing interest among cryptocurrency investors in restaking as a way to boost returns.

Kraken’s new restaking feature is designed to simplify the process for its users, offering a more accessible way to participate in this emerging sector. Mark Greenberg, Kraken’s global head of asset growth, emphasized the ease of entry, stating that the integration “significantly lowers” the barriers for investors, especially since many are already familiar with centralized exchanges.

In partnership with its subsidiary, Staked, Kraken will act as the validator for ETH restaked through its platform. Staked is a prominent EigenLayer operator that typically serves institutional clients, making it well-positioned to handle the complexities of restaking. This collaboration allows Kraken to tap into Staked’s expertise and offer the feature to a broader audience.

Users participating in restaking through Kraken will have the flexibility to manage their rewards. They can hold the earnings on the exchange or trade them for fiat currency or other cryptocurrencies, offering multiple options for managing their gains.

While this feature is available across many parts of Europe, it is notably restricted to non-U.S. customers due to regulatory considerations. Kraken confirmed that "geographic restrictions apply" to certain jurisdictions, including the United States.

The timing of Kraken’s restaking launch aligns with recent developments within the EigenLayer ecosystem. EigenLayer’s native token, EIGEN, was unlocked for trading on September 30, 2024, with leading exchanges such as Binance listing it for trading alongside major cryptocurrencies like Bitcoin and Tether.

Kraken’s Ethereum restaking feature works by using staked ETH to secure various decentralized platforms, referred to as Actively Validated Services (AVSs). By securing these dApps, users earn additional rewards on top of their regular ETH staking rewards, which are typically distributed in AVS tokens representing the dApps their restaked ETH supports.

However, restaking comes with additional considerations. EigenLayer imposes a minimum 7-day escrow period, alongside Ethereum’s unbonding period, meaning that accessing restaked ETH may take longer compared to traditional staking.

To participate in EigenLayer restaking via Kraken, users need to have a verified Kraken Pro account at the Intermediate level or above, ETH in their spot or staked balance, and residency in a non-restricted location.

photo source / Blockonome