Last week, SwissBorg lost $41 million worth of SOL, due to a suspected compromise in its integration with their staking provider, Kiln. On-chain, staking on Solana is fundamentally low-risk. It’s non-custodial, and there is no slashing on Solana. When you delegate tokens to a validator, you remain in full control of those tokens. A validator cannot spend, lock, or destroy delegated tokens. At worst, if a validator stops validating, the delegator simply stops earning rewards. So how could a compromise lead to a loss of 193K SOL?
The answer lies in the difference between security-by-assumption and security-by-design. Traditional finance relies on trust and legal enforcement. In crypto, we rely on cryptography. We build systems that are secure by construction, rather than by assumption. We build systems that don’t have the ability to lose funds, rather than a mere legal obligation not to. Transaction crafting APIs go against these principles, and introduce unnecessary risk. Risk that, as the incident shows, is not negligible.
At Chorus One, we offer an SDK to help with transaction crafting, but we have never built a transaction crafting API, because such an API is fundamentally a security hazard. It’s a dangerous primitive that should not exist. We provide the tools to simplify staking, and we help our customers build their integration in ways that are secure by design, and which mitigate attack vectors that can result in a loss of funds, even in case of a breach. In today’s computing landscape, compromises are a matter of when, not if. For a system to be secure, it’s not enough to try and prevent a breach. A secure system takes the possibility of a breach seriously, and takes measures to limit the blast radius when a breach inevitably happens. A secure system employs defense in depth: a layered approach to security, so that a breach of a single layer is not fatal to the entire system. And most of all, a secure system minimizes attack surface. The only API call that can’t be compromised, is one that does not exist.
In this post we’ll clarify the technical details of staking transactions on Solana, and the security implications of the different ways of constructing them.
To stake on Solana, you have to craft a staking transaction, sign it, and broadcast it to the Solana network through an RPC node. As part of this staking transaction, you choose which validator to delegate to, and how much to delegate. The Solana network will process that transaction, and from that point on, you’re staking. If the validator that you delegated to performs its duties, the network automatically distributes staking rewards to your account.
Unstaking is a two-step process. First, you send a stake deactivate transaction to signal your intent to stop staking. After the network processes this transaction, it takes time for the stake to become inactive. As soon as the stake is inactive, you can send a stake withdraw transaction to make the SOL liquid again.
Staking transactions are a core part of Solana, and they work the same regardless of the validator that you want to stake with. Just as the amount to stake is a parameter in the transaction, the validator to delegate to is a parameter. Supporting delegation to one validator is no more difficult than supporting delegation to another, and different staking providers in principle do not need different integrations.
At a low level, a staking transaction is a small piece of data. We need to encode the parameters, ( e.g. which validator to stake to and amount of SOL to delegate,) into a binary format. Because stake transactions are fairly simple, writing code that generates the correct bytes is not too difficult for a developer familiar with Solana, and it’s possible to understand and verify the meaning of every byte in the encoded data. Still, it requires a few steps to prepare the data in the correct format, so the developers of the Solana blockchain offer a library that can do this in a single step. Application developers can embed that library into their application, and as a result, they can support Solana staking with less effort.
Adopting a library creates risk: by calling a library, a developer is now leveraging third-party code to craft a staking transaction, but how does that developer know that the third-party code is behaving as expected and not, say, crafting a transfer transaction that sends all their users’ funds to an attacker’s wallet? Fortunately, Solana’s libraries are open source. Developers can read the source code, and observe for themselves that there is nothing fishy going on. When Solana developers include exactly that code into our application, the system is secure.
To support staking on Solana, in principle you don’t need to integrate with a staking provider at all. If you can craft staking transactions, you’re good to go, and crafting staking transactions is easy. Still, there are reasons to integrate more deeply with a staking provider, such as tracking delegations for the purpose of rewards reporting. Such features do not need to interact directly with transaction crafting, and when implemented correctly, do not compromise the security of the system.
A different reason to go with vendor-specific integrations is uniformity. The Solana developers offer a library for transaction crafting on Solana, the Aptos developers offer one for Aptos, etc. Integrating any single chain is not too complex, but supporting 30+ chains, and a multitude of ways to sign (software wallets, hardware wallets, multisigs, custodians, etc.) … it adds up.
At Chorus One we understand this struggle, and that’s why we built the Chorus One SDK that bundles everything in a single place, behind a consistent interface. While some domain knowledge will always be needed to integrate a chain — different blockchains are just that different! — our SDK helps developers kick-start their integrations.
Our SDK is a layer on top of the official libraries offered by the chains we support. As with any decision to adopt a library, introducing an additional layer introduces risk. There is more code, more parties involved, and in general more moving pieces with room for error. To mitigate this risk, our SDK is open source. Anybody can see what it’s doing, and confirm that nothing fishy is going on. Still, every new layer brings at least some minuscule amount of risk, so we allow our customers to make this trade-off for themselves. Our SDK is there to help institutions integrate staking faster, with less effort, but for those unable or unwilling to introduce additional third-party code, it is always possible to use the underlying libraries directly.
There are multiple ways for an application to integrate functionality provided by a third party. Two popular ones are the SDK, where the third party provides a library of code to include into the application, and the REST API, where the application connects over the Internet to somebody else’s computer, to ask it to perform some task.
With our SDK, you embed our code directly into your application. Because the code runs as part of your application, this means that it continues to work regardless of what happens to Chorus One. If we disappeared tomorrow, our validator may stop validating, and we would not release new versions of the SDK, but you would still be able to craft unstake transactions. A library-based integration is also great for uptime: there is nothing that can go down, it’s 100% reliable by construction. It’s also great for security: you know exactly what code will run. You can read it and verify what it does, and you can be sure that it doesn’t change under your feet.
In practice, most developers don’t read the code of the libraries they use in detail. For even a modestly complex application, this would be utterly infeasible for a single person. Even in crypto, software is to some extent built on trust. For transaction crafting however, because it’s such a critical component, and because it’s not that complex, it is feasible to verify the full source code, and we would recommend any integration partner to do that. With our SDK the choice is yours: trust, or trust but verify. Once you’ve verified, you can be confident that your system is secure even going forward, because you control when you update your code.
Contrast this with an API. With an API, you make a request to a third party, who then runs code to compute a response. From a reliability standpoint alone, this introduces a critical dependency on the third party. If their API is offline, your application stops working. From a security perspective, it introduces an even more critical dependency. You get to see the response to your request, but not the code that computed it. If you ask a transaction crafting API “please give me a staking transaction”, how do you know that the response is really a staking transaction, and not a transaction that steals your funds? One way of verifying that would be to decode the transaction, but that’s as complex as crafting one in the first place. Making an API call and then verifying the result at best creates additional work, and in the worst case introduces reliability problems. For something as critical as transaction crafting, not verifying is not an option. It would be reckless to blindly trust a third party. Note that it’s not enough to verify once. You need to write code that verifies every response. This is because the API is not under your control. The third party can change it at any time. Your application can start misbehaving even when you made no changes to it. And as the potential breach of Kiln’s API painfully demonstrated, a third party API can even start returning malicious responses.
APIs do have their place. We need APIs, for example to submit transactions to the blockchain. An API does mean introducing a third party, and we have to carefully consider how that affects the security of the system. For something as critical as transaction crafting, blindly trusting an API is not only reckless, it is also completely unnecessary. That’s why we offer the Chorus One SDK as a library, rather than an API.
To learn more about Chorus One’s SDK, access our docs or reach out for a demo.
As corporate treasury strategies evolve beyond Bitcoin, a new era is emerging, where crypto assets are not only held but put to work. In our previous piece, Treasury 3.0: How Digital Asset Treasuries Are Turning Crypto into Yield, we explored how companies began expanding from BTC reserves into yield-generating assets like Ethereum and Solana through staking. Now, as more treasuries adopt active on-chain strategies, including restaking, liquid staking, and DeFi integrations, the pressure is mounting to match these innovations with enterprise-grade reporting. Tracking rewards across dozens of chains, validators, and wallets is a strategic imperative. Without robust, auditable reward data, even the most promising digital treasury strategy can become a liability.
As treasuries shift from passive holding to active reward generation, accurate reporting becomes a key requirement. Every staking reward, restaking payout, or MEV gain constitutes taxable income, potentially with varying fair market values, and protocol-specific nuances. Without a robust system to capture, timestamp, and reconcile these events, finance teams risk producing inaccurate financial statements or triggering red flags with auditors and regulators. The challenge compounds with multichain exposure: fragmented wallets, inconsistent reward structures, and untracked validator commissions all introduce operational noise. High-quality reporting is how treasury teams ensure they’re maximizing yield opportunities, maintaining audit readiness, and preserving institutional trust with stakeholders.
So what defines treasury-grade crypto reporting? It starts with multi-chain coverage and accurate, granular data: daily attribution of rewards, including staking yields, restaking payouts, and MEV income, mapped to the specific wallet, validator, and protocol that generated them. Institutions also need visibility into validator commissions, service fees, and any slashing events that affect net returns. As many treasuries segment assets by fund, business unit, or jurisdiction, reporting must support wallet-level granularity and entity-specific tagging. Just as important is the format: data must enable seamless integration into back office systems, and ultimately align with GAAP or IFRS standards as digital assets are formally recognized in financial reporting frameworks. Fair market value (FMV) at the time of reward is a critical enhancement that enables compliance with IRS Revenue Ruling 2023-14 and emerging EU tax rules under DAC8. Without these capabilities, crypto reporting falls short of the institutional bar.
Consider the journey of a typical corporate treasury evolving its digital asset strategy. In the early phase, the fund holds BTC, tracked through simple ledger tools or custodial statements. But as it adds ETH and begins staking ETH, complexity creeps in. Rewards accrue on-chain, commissions may vary, and new wallets emerge for each protocol. By the time the finance team embraces restaking strategies through EigenLayer or allocates to DeFi vaults, its treasury operations involve dozens of addresses, multiple chains, and a constant stream of taxable events. Without a unified reporting system, the result is fragmented data, error-prone manual reconciliation, and an unreliable audit trail. In contrast, Chorus One’s Rewards Reporting tool provides a single source of truth: dashboards tracking staking and reward activity across multiple chains, daily performance summaries, and downloadable reports ready for fund administrators, auditors, and tax professionals. It enables crypto treasuries to scale with confidence, knowing their yield strategies are matched with enterprise-grade transparency.
Chorus One’s Rewards Reporting is designed to meet the operational and compliance demands of modern crypto treasuries. Its validator monitoring tools allow finance and ops teams to track uptime, reward rate consistency, and restaking activity across 20+ supported protocols, without needing to rely on explorers or raw chain data. Every staking reward is calculated with precision, accounting for validator commissions, service fees, and available rebates to ensure accurate net attribution. And reports can be exported in Excel or CSV formats for seamless integration into existing back off systems ready for accounting systems, fund administrators or auditors.
As crypto treasuries evolve to embrace staking, restaking, and DeFi strategies, the infrastructure that supports them must evolve as well. Sophisticated digital asset strategies demand equally sophisticated reporting tools that deliver precision, transparency, and compliance at scale. With its reporting tool, Chorus One equips institutional teams with the visibility and structure needed to turn raw on-chain activity into actionable financial intelligence. Whether you're optimizing validator performance, preparing for an audit, or reconciling yield across a global treasury, Chorus One ensures that your reporting is as productive and reliable as the assets it supports.
Digital Asset Treasury Companies (DATs) are redefining corporate treasury management for the blockchain era. By combining traditional finance principles with decentralized technologies, these companies are turning static crypto holdings into productive assets that generate yield, enhance capital efficiency, and contribute to the security of proof-of-stake (PoS) networks.
The opportunity has never been stronger. In the U.S., recent legislative wins, such as the GENIUS Act and the Digital Asset Market Clarity (CLARITY) Act, have provided much-needed regulatory certainty. These laws not only define the oversight roles of the SEC and CFTC, but also clarify that staking activities do not automatically create securities liabilities. This removes a major roadblock for enterprises seeking to generate yield through staking.
From Bitcoin-heavy strategies like Strategy (formerly MicroStrategy), to Ethereum staking specialists like Bit Digital and SharpLink Gaming, to Solana-focused treasuries like DeFi Development Corp, DATs are embracing diverse approaches. Yet the common thread is clear: yield is no longer optional – it’s the core driver of Treasury 3.0.
At Chorus One, we view DATs as pioneers bridging two financial worlds. This article explores how these companies evolved, why yield generation is now imperative, and how secure, compliant staking infrastructure is enabling the next phase of treasury innovation.
The modern DAT movement began in 2020 when MicroStrategy invested $250 million in Bitcoin, positioning it as a hedge against inflation and currency depreciation. By July 2025, the company had grown its holdings to 601,550 BTC, worth over $70 billion at then-current prices.
Other corporations followed: Tesla, GameStop, and Japan’s Metaplanet among them, primarily focusing on accumulation and long-term appreciation. While effective in bull markets, these strategies left treasuries exposed to volatility.
Ethereum’s September 2022 transition to PoS marked a turning point. Now, holders could earn 3–5% APY simply by staking. Public companies quickly pivoted:
By mid-2025, public companies held 2.33 million ETH worth $8.83 billion.
Today, leading DATs go beyond vanilla staking. They layer liquid staking, restaking, and DeFi integrations to compound returns:
Combined, these strategies can yield 6–10% or more, turning treasuries into dynamic revenue engines.
Want more? To read the full whitepaper by Chorus One's Head of Sales for the Americas and regular Forbes Contributor, Leeor Shimron, and Head of Legal, Adam Sand, follow this link.
Coindesk and others reported on today's launch of the REX-Osprey SOL + Staking ETF, highlighting its pioneering approach as the first U.S. exchange-traded fund to combine crypto exposure with on-chain staking rewards. Trading on the CBOE and structured under the Investment Company Act of 1940 (‘40 Act), the fund offers investors access to Solana (SOL) while earning yield from staking. This is a watershed moment in digital asset finance because staking yield is no longer limited to wallets and validators.
To sidestep the long regulatory bottlenecks of the ‘33 Act spot ETF route, Osprey and REX opted for the more nimble ‘40 Act structure. They created a C-corporation that owns a Cayman-based subsidiary, which in turn acquires and stakes SOL tokens. This clever structuring enabled the ETF to launch faster and earn SEC clearance with a “no further comment” letter.
The result? Institutional-grade exposure to SOL, with staking yield, wrapped inside a regulated, listed fund. It’s a huge step forward in making staking mainstream and accessible via trusted financial rails.
While fast, this C-corp route has its drawbacks. As The Block outlines, C-corporations are subject to corporate tax, meaning some of the staking rewards could be liable for taxation before being realised by shareholders. And while the SEC had no further comment about the fund’s launch, this sparks an intriguing dialogue about the opportunities for innovation in fund compliance with ‘40 Act requirements, especially around asset composition and disclosure.
Ultimately, it's a practical solution that allows for the introduction of staking to the market right now, with exciting opportunities for future enhancements.
Encouragingly, the Osprey ETF may only be the beginning. Bloomberg’s James Seyffart recently noted that grantor trusts, the structure used in today’s spot Bitcoin and Ethereum ETFs, may soon be permitted to include staking. If approved by the IRS, this would allow ETF sponsors to pass staking income directly to shareholders without triggering corporate tax obligations.
This would remove the biggest efficiency drag from staking ETFs and enable more streamlined product designs with broader market appeal.
This shift toward efficiency is being propelled by a wave of pending legislation. Chief among them is the CLARITY Act, introduced in May 2025, which aims to:
Alongside this, other crypto-relevant bills are gaining momentum:
Of course, not all of these bills will become law, but it is clear that the legislative and regulatory environment is increasingly pro-clarity, pro-infrastructure, and pro-innovation. Osprey is the vanguard, but the next generation of staking ETFs will likely be faster, simpler, and more tax-efficient.
Bottom Line: The Osprey SOL + Staking ETF is an exciting breakthrough. It unlocks staking yield for ETF investors using creative structuring and regulatory navigation. Even better, a suite of legislative and tax changes is lining up to make these kinds of products simpler, leaner, and more mainstream. This is how crypto goes institutional.
Restaking is an emerging concept that has quickly become a central theme in the current crypto cycle. However, this concept is not new; the earliest example of restaking can be traced back to Polkadot’s Parachain system. Each Parachain can have its own specific use case, governance model, and tokens, but they all benefit from Polkadot’s shared security model, meaning they don’t need to secure their own networks. Instead, they rely on the Relay Chain for security, allowing the stake on Polkadot to secure other chains.
This concept has also been adopted by Cosmos through Interchain Security. The concept of Replicated Security involves one blockchain serving as a security provider for other blockchains. The blockchain that provides security is referred to as the Provider Chain, while the blockchains inheriting the full security and decentralization of the Provider Chain are called Consumer Chains.
More recently, the concept has been brought to Ethereum via EigenLayer, and projects like Symbiotic and Karak have also emerged, actively competing within Ethereum's ecosystem. On Cosmos and Polkadot, restaking is embedded directly within the protocol, in contrast on Ethereum, restaking is facilitated via smart contracts, creating a more open market where restaking marketplaces can operate independently. Here, the idea is to use ETH, ETH LSTs, or ERC20s to secure other networks, known as Actively Validated Services (AVS), in order to earn additional yield while accepting additional risks, such as slashing (which would come in the future). With Ethereum’s rollup-centric roadmap and the growth of Layer 2s, liquidity and dApps are increasingly shifting away from Ethereum Layer 1 to L2s. As a result, the core value proposition of Ethereum Layer 1 will become its economic security and large market capitalization. EigenLayer, along with other restaking marketplaces like Symbiotic and Karak, capitalizes on this by offering economic security to Ethereum-aligned external networks.
In this paper, we will provide an overview of the restaking market on Ethereum as it stands today, explore its business model and economics, and discuss the future of the restaking landscape and its challenges.
In the Ethereum restaking space, 3 prominent platforms have emerged: EigenLayer, Symbiotic, and Karak. EigenLayer has taken the lead as the first restaking marketplace to launch on Ethereum Mainnet and continues to dominate in terms of Total Value Locked (TVL), with over 4.17 million ETH equivalent.
On June 19, 2024, EigenLayer reached its peak TVL, hitting an all-time high of 5.43 million ETH equivalent before experiencing a slight decline.
Symbiotic began accepting deposits on June 11, 2024, quickly reaching its initial deposit cap of 41,290 wstETH in just 5 hours. A second cap of 210,600 wstETH was set on July 3, 2024, and was also reached within 4 hours. The last cap was introduced on August 14, 2024, coinciding with the launch of BTC deposits. These different deposit caps are clearly visible in the graph below.
Currently, Symbiotic has approximately 644,000 ETH equivalent deposited on its platform.
Note: Symbiotic has not yet launched its mainnet, users can only deposit funds at this stage.
Karak successfully launched its mainnet on October 18, 2024, marking a significant milestone for the platform. However, the protocol has attracted slightly fewer deposits compared to both EigenLayer and Symbiotic, with around 205,000 ETH equivalent deposited.
In this competitive market, despite the emergence of new platforms, EigenLayer remains the clear leader, holding approximately 6x more TVL than Symbiotic and 20x more than Karak.
A significant portion of EigenLayer's TVL is driven by Liquid Restaking Protocols (LRTs). Our analysis of the major LRTs on EigenLayer shows that they currently account for approximately 75.37% of the platform's TVL, with an all-time high of 75.46% in July 2024. This indicates that more than 75% of the TVL in EigenLayer comes from users interacting with Liquid Restaking protocols rather than directly through the EigenLayer application.
The protocols included in our analysis are EtherFi, Renzo, Puffer Finance, Kelp DAO, Swell, and Bedrock.
When examining the composition of each LRT, we can see that EtherFi is the largest LRT contributor on EigenLayer, followed by Renzo and Puffer.
There are several reasons why LRTs have become the primary liquidity source for EigenLayer and restaking platforms in general:
Looking at Symbiotic, a similar pattern emerges, with approximately 61.61% of the TVL coming from Mellow vaults and EtherFi. This highlights that a large portion of liquidity is funneled through external protocols rather than directly through Symbiotic itself.
Only about 38.39% of the total TVL has been deposited directly via the native Symbiotic app.
For Karak, the situation is a bit different. It appears that there is only one major LRT on Karak, which is EtherFi with around 17% of the TVL, while 83% of the Karak TVL has been deposited on the native app.
Let’s dive into recent movements in the restaking space. A quick look at the inflows and outflows between EigenLayer and Symbiotic suggests that large inflows into Symbiotic correspond with outflows from EigenLayer.
Based on a recent analysis from Gauntlet, covering the period from June to September 2024, approximately 1,011,000 ETH was withdrawn from EigenLayer during this time. Of this, around 170,000 ETH was moved directly to Symbiotic. However, users didn’t just transfer this amount, they added another 37,000 ETH on top, making a total of 207,000 ETH deposited into Symbiotic.
The 207,000 ETH deposited into Symbiotic accounts for about 42.20% of the 488,000 ETH locked in Symbiotic at that time, meaning that approximately 42.20% of Symbiotic's TVL came directly from withdrawals on EigenLayer.
However, it’s important to note that only 16.5% of the ETH withdrawn from EigenLayer has remained within the restaking ecosystem, while the other 83.5% has exited the market entirely for now.
EigenLayer and Symbiotic flows, Source: Gauntlet
Restaking is supposed to allow networks, commonly known as Actively Validated Services (AVSs) in the restaking ecosystem, to quickly bootstrap a validator set and get a certain level of economic security with minimal time investment.
In this model, platforms like EigenLayer, Symbiotic, and Karak act as marketplaces where restakers, operators, and AVS entities come together. However, their goals are not the same. Here’s a breakdown:
At this point in the market, very few AVSs have clearly defined how much economic security they need or how much they are willing to offer to attract operators and restakers.
Who is restaking meant for?
Restaking has not yet found a clear product-market fit. It isn’t particularly suited for high-value, high-FDV networks, as these networks are large enough to offer large incentives, manage their own validator sets, and provide additional utility for their native tokens (for example, staking the native token to earn a staking yield, rather than paying restakers who hold a different token). It’s difficult to imagine large networks like Monad or others using restaking.
That said, restaking seems more suitable for small to medium-sized projects that don’t yet have the resources to bootstrap a totally sovereign network. Restaking allows them to grow, mature and find product-market fit before being totally sovereign without relying on 'rent' payments to holders of other tokens. However, there are also some AVSs that use restaking for very specific purposes and are not intended to be sovereign, as they bring services and value to the underlying Layer 1.
EigenDA stands out as the first AVS to distribute yield to both restakers and operators. Currently secured by around $10 billion in economic security, it has become a significant player in the emerging restaking ecosystem. However, the economics of maintaining such a network pose several challenges and require a closer examination.
Yield Distribution and Economic Security
EigenDA currently offers 10 ETH per month in rewards to restakers and operators. With a TVL used for economic security of around $10 billion, the total annual amount distributed to operators and restakers corresponds to $300,000 assuming the price of ETH at $2,500. Assuming an economic security of $10 billion, this represents a gross APR of just 0.003%.
This low yield highlights a key challenge in the restaking model: balancing the need for economic security with adequate incentives for participants.
The Cost of Running an AVS
The cost of operating an AVS varies based on the specific infrastructure and requirements needed for it, but on average, we estimate the monthly infrastructure cost to run at around $400 per AVS. Over the course of a year, this represents approximately $4,800 for a single AVS. With 18 AVSs currently in the market, the annual cost for one operator to run all of them comes to $86,400. It’s important to note that this figure does not account for additional expenses such as the salaries of the DevOps teams required to maintain and secure the infrastructure.
EigenLayer currently has 340 operators running at least one AVS each. If an AVS wants to fully leverage the economic security provided by EigenLayer while ensuring that operators cover their infrastructure costs, the financial commitment grows significantly. The formula is simple:
• $400 per month per operator
• 340 operators
This results in a total annual infrastructure cost of $1.63 million. And that’s just for maintaining the infrastructure by 340 operators, it doesn’t include the incentives that need to be paid to restakers.
Cost for an AVS to cover infrastructure costs
EigenLayer has introduced programmatic incentives to maintain its TVL on the platform. You can track the yield from these incentives here. EigenLayer is distributing 16,736,467 EIGEN to Eigen restakers and operators over one year, and 50,209,400 EIGEN to ETH and ETH LST restakers. This not only supports the restaking economy but also helps AVSs to take the time to find ways to incentivize operators and restakers.
In most cases with restaking, AVSs that aren’t yet generating revenue will likely introduce a native token to incentivize restakers. This means they will use their native token to compensate ETH restakers or other ERC20 restakers. As a result, restakers who may simply prefer their rewards in ETH or a specific ERC20 token, are likely to automatically convert these AVS rewards back into their preferred tokens.
Economically, this model is fundamentally weaker than a traditional Proof of Stake system. In traditional staking, participants buy the native token, show commitment to the project, and stake to earn rewards. Since they’ve invested in the native token, they are more likely to hold onto their staking rewards longer than restakers who receive AVS rewards.
In today’s restaking market, there are also auto-compounding products that automatically convert restaking rewards into ETH to boost the restaked position, which encourages immediate selling of AVS tokens.
As slashing goes live, we expect restakers to pay closer attention to the operators they select, particularly the quality of services offered. Additionally, TVL growth will likely be driven by operators’ ability to deliver the best risk-adjusted returns.
Marketplaces are expected to become more flexible, with leading AVSs establishing caps on the amount of security they require or incentivize. The evolution of TVL numbers for AVSs is likely to change as soon as the activation of slashing and yield mechanisms will encourage each AVS to set limits on the TVL they incentivize. This implies that delegations to each AVS will be limited, or yields will be diluted, as AVSs aim to avoid paying for excess security they don’t need.
The introduction of a new security model that distinguishes between "unique" and "total" stake will reshape distribution.
We anticipate different methods by which AVSs will compensate operators for providing security:
At this stage, we believe the leading node operators will benefit in two key ways:
This change in economic conditions could impact major Liquid Restaking Protocols. They attracted substantial liquidity thanks to their own incentives in native tokens, but they now have billions in economic security to provide to AVSs, which, on the other hand, will be difficult to incentivize given the high amount to incentivize for the AVSs. What we see is the following:
To be sustainable, the best LRTs must offer at least the Ethereum staking yield and compete directly with Liquid Staking Tokens (LSTs). This is why many LRT protocols accept native ETH (such as EtherFi, Renzo, Swell, etc.). Even if the restaking yield isn’t significant, users still gain exposure to an LST+ protocol, meaning they receive the benefits of liquid staking as a baseline, with potential upside if the restaking yield becomes attractive.
The Ethereum restaking ecosystem has unlocked new possibilities, enabling small to medium-sized projects to leverage Ethereum’s economic security. While restaking offers significant advantages, its current economic model and design face some challenges. As Ethereum restaking continues to evolve to address these issues, we can expect increased collaboration between AVSs and leading operators, fostering a stronger and more sustainable ecosystem for restakers.
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
In the context of Ethereum and Proof-of-Stake (PoS) networks, the Annual Percentage Rate (APR) is often presented as a clear and accessible measure of validator performance. As a summary statistic, APR seeks to answer a straightforward question: If I stake 32 ETH today, how much can I expect to have after one year?
However, APR is fundamentally an oversimplification of a highly complex system. Its role as both a measure of past returns and a forecasting tool obscures the intricate dynamics that govern validator rewards on Ethereum.
For example, using APR to predict future returns is like:
- > Using a small sample of stocks from the S&P 500 to estimate the average yearly return —similar to how APR behaves for small validators.
-> Using just 1-2 years of S&P 500 data to forecast long-term returns —similar to relying on short-term APR data like 7-day or 30-day rates.
This article aims to unpack the underlying biases of APR, explore the stochastic nature of validator rewards, and propose alternative metrics that offer a more accurate assessment of node operator performance—metrics which align more closely with operational realities. Finally, we will examine how Chorus One’s approach, incorporating our proprietary MEV-boost fork, Adagio, captures a more refined understanding of Ethereum staking dynamics. By optimizing the interaction with Ethereum’s proposer-builder separation, Adagio allows us to consistently improve validator efficiency, resulting in tangible improvements in performance without relying on the variability of APR metrics.
Ethereum validators are compensated through two primary reward streams:
While the attestation process is deterministic, rewards from block proposals and MEV are inherently probabilistic. This variability introduces a fundamental challenge: APR assumes a uniform distribution of rewards across validators, which is far from reality. The skewed nature of the reward distribution makes APR a poor proxy for expected returns, especially over shorter time horizons.
The central flaw in using APR as a measure of validator performance lies in its failure to account for the randomness that defines much of the reward structure. To illustrate this, consider the following:
As these rewards are driven by skewed distributions, their mean value—a key input for APR—becomes a biased estimator. Skewness is a measure of how asymmetrically data is distributed , see e.g. here. In probability theory, the mean of a skewed distribution is a poor representation of the typical outcome. Validators who are fortunate enough to receive multiple block proposals or sync committee assignments will see a disproportionately higher APR compared to validators who, through no fault of their own, are assigned fewer opportunities.
To further understand how randomness impacts APR, it is useful to visualize the reward distribution for validators operating at different scales.
The plot above shows how reward skewness changes based on the number of validators controlled. Precisely, higher is the skewness, longer is the upper tail, indicating that the overall distribution is asymmetric on the right. The consequence is that the mean is higher than the median. MEV rewards are the most skewed (bottom-right), meaning they vary the most between validators. Sync committee selection also has a significant impact (top-left), while block proposals have the least skew (bottom-left).
What’s clear is that as the number of validators increases, the skewness in rewards drops significantly. This means larger validator sets see more consistent rewards, while smaller sets face more variability due to randomness. The same holds true even by accounting for only a smaller time period instead of the whole year data.
-> This highlights why APR, when viewed in isolation, is not a reliable measure of performance, particularly for node operators running fewer validators.
This plot shows the distribution of simulated APR assuming different number of validators controlled. It is evident how the APR becomes reliable only when the number of controlled validators is high compared with the number of active validators (purple and cyan histograms). This is because, as we saw earlier, when more validators are controlled, the skewness in rewards decreases, making APR more reliable.
It is worth noting that, the aggregate APR of an entity controlling more validators is not the APR of a single customer, usually holding a lower number of validators. In this case, the APR of the small subset is affected by higher variance as in the case of low number of validators controlled.
However, when rewards are pooled—such as in solutions like Chorus One’s ETH staking vault on Stakewise —this variance is minimized. By pooling rewards across many validators, customers gain exposure to the performance of top-tier node operators while benefiting from a more consistent and stable APR.
In light of these insights, what should we look at when evaluating a validator’s true performance? A more reliable framework involves focusing on the operational aspects that are within the control of the validator:
These metrics provide a far more grounded understanding of validator performance than APR, which often serves more as a reflection of stochastic luck than actual skill or operational consistency.
At Chorus One, we approach Ethereum staking with a deep commitment to performance optimization. While APR figures may fluctuate due to the randomness of block proposals, we have developed sophisticated tools to maximize validator returns and minimize variance.
Central to this approach is Adagio, our internally optimized MEV-boost client. Adagio improves Execution Layer rewards by optimizing the way we interact with block builders. Specifically, we have introduced latency parameters that allow us to extract higher MEV rewards without compromising slot accuracy. This gives our validators a distinct advantage in capturing Execution Layer rewards, effectively smoothing out the variability that undermines traditional APR metrics.
Moreover, our focus on uptime and effectiveness ensures that our validators consistently outperform industry benchmarks. By maintaining near-perfect operational performance and leveraging cutting-edge tools like Adagio, Chorus One is able to deliver superior returns over the long term, irrespective of the randomness that defines APR calculations.
Source: Ethereum Network
Source: Chorus One
Over the past 30 days, Adagio has delivered an 8.45% increase in MEV rewards compared to a standard configuration without Adagio.
For real-time tracking of Adagio's MEV rewards and to explore its performance further, visit our live dashboard: Adagio Dashboard.
APR, while often used as a shorthand for node operator performance, is a fundamentally flawed metric. Its reliance on skewed distributions and random events, such as block proposals and sync committee participation, makes it a biased estimator for expected returns. Instead of focusing on APR, a more reliable approach to evaluating validator performance involves analyzing metrics like effectiveness, uptime, and frequency of fulfilled duties.
At Chorus One, our focus on operational precision and technical advancement allows us to consistently deliver reliable performance. With solutions like Adagio, we enhance reward optimization, offering staking outcomes that navigate the inherent volatility and randomness of APR-based assessments.
Staking ETH with Chorus One is effortless—just a few clicks, and you’re on your way to earning rewards. No hassle, just seamless staking.
Start staking today: https://opus.chorus.one/pool/stake/
Or, speak to our team to learn more.
Learn more about MEV and Ethereum node operator performance:
MEV:Metrics that Matter
Timing Games and Implications on MEV extraction
Check out all our research reports
About Chorus One
Chorus One is one of the largest institutional staking providers globally, operating infrastructure for over 60 Proof-of-Stake (PoS) networks, including Ethereum, Cosmos, Solana, Avalanche, Near, and others. Since 2018, we have been at the forefront of the PoS industry, offering easy-to-use, enterprise-grade staking solutions, conducting industry-leading research, and investing in innovative protocols through Chorus One Ventures. As an ISO 27001 certified provider, Chorus One also offers slashing and double-signing insurance to its institutional clients. For more information, visit chorus.one or follow us on LinkedIn, X (formerly Twitter), and Telegram.
The Avalanche Foundation has unveiled ACP-77, a transformative proposal set to redefine Subnet creation and operation within the Avalanche blockchain ecosystem. This ambitious initiative aims to lower entry barriers, enhance flexibility, and foster a more decentralized and dynamic network environment. Here, we delve into the intricacies of ACP-77, exploring its current context, proposed changes, benefits, and potential challenges.
-> Please note, ACP-77 proposes renaming 'Subnets' to 'Avalanche L1s (Layer 1s)'. If the proposal passes, they will henceforth be known as Avalanche L1s.
Subnets and their role: In the Avalanche ecosystem, subnets function as independent blockchains that leverage the mainnet for interoperability. However, the existing requirements for Subnet validation have created significant hurdles for developers.
The cost barrier: Currently, validators of Subnets must also validate the Avalanche mainnet, necessitating a minimum stake of 2,000 AVAX. At today's rates, this amounts to a substantial financial commitment, approximately $70,000. This high cost deters many developers that aim to jumpstart their Subnet by running their own validators, stifling innovation and limiting the expansion of the subnet ecosystem.
ACP-77 introduces a series of pivotal changes designed to overhaul the Subnet creation process, making it more accessible and efficient.
1. Decoupling Subnet and Mainnet validation:
2. Enhanced validator set management:
3. P-Chain fee mechanism:
4. Streamlined synchronization:
The proposed changes in ACP-77 bring several significant benefits to the Avalanche network and its developers.
1. Lower costs and increased accessibility:
2. Greater flexibility and autonomy:
3. Incentives for decentralization:
4. Enhanced security and interoperability:
While ACP-77 promises numerous benefits, it also introduces certain challenges that need to be addressed.
1. Economic implications:
2. Implementation complexity:
ACP-77 represents a bold and forward-thinking step in the evolution of the Avalanche network. By lowering financial barriers, enhancing flexibility, and promoting decentralization, this proposal has the potential to unlock unprecedented growth and innovation within the Subnet ecosystem. While challenges remain, the careful implementation of ACP-77 could pave the way for a more accessible, dynamic, and resilient Avalanche network, fostering a new era of blockchain development and collaboration.
About Chorus One
Chorus One is one of the biggest institutional staking providers globally, operating infrastructure for 60+ Proof-of-Stake networks, including Ethereum, Cosmos, Solana, Avalanche, and Near, amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures. We are a team of over 50 passionate individuals spread throughout the globe who believe in the transformative power of blockchain technology.
Before getting started with this edition of the Restaking Synopsis, we’d like to take a moment to highlight our uniqueAVS Selection Framework, that we announced on Thursday, May 9th!
TL;DR:
Since EigenLayer launched, operators have been busy onboarding every AVS out there. But there’s only 1 problem with that - this may not be a wise long-term approach.
We've detailed why in an article (linked below), and to summarize, here's what sets our approach apart:
🛑 No "Onboard All" Promise: We prioritize AVSs with breakout potential, filtering out those with complexity and risk.
✅ Rigorous Criteria: Our selection filters are based on strict engineering, security, and economic factors.
🎖Quality Over Quantity: Only AVSs that meet our criteria will be onboarded.
This reflects our customer-first principle and long-term vision for the EigenLayer ecosystem.
Feel free to check out the full article for more details on our AVS Selection Framework, why we're taking this unique approach, and why this approach is an important consideration for EigenLayer users.
Read the entire article here: https://chorus.one/articles/the-chorus-one-approach-to-avs-selection
🌟BONUS: Here's a meme-thread explanation of our AVS Selection: https://x.com/ChorusOne/status/1788928433461903496
OPUS Pool enables you to seamlessly stake ETH, restake a variety of LST’s and delegate your restaked assets to Chorus One on a single platform.
✅ Stake, Restake, and Delegate using just a few, simple clicks
✅ Completely permissionless
✅ Easily view/download your entire historical staking rewards report
✅ View and track your restaked asssets
✅ All on a single platform
Visit OPUS Pool: https://opus.chorus.one/pool/stake/
Your guide to OPUS Pool: https://chorus.one/articles/your-guide-to-opus-pool-stake-mint-oseth-and-restake-with-eigenlayer
As of May 10, you can claim your EIGEN, restake it (if you haven’t already) and choose to delegate to an EigenLayer Operator for future rewards!
The steps?
1. Claim EIGEN here: http://claims.eigenfoundation.org
2. Restake it (if you haven’t already): http://app.eigenlayer.xyz/restake/EIGEN
3. Delegate your restaked assets to Chorus One: https://app.eigenlayer.xyz/operator/0xf80b7ba7e778abf08a63426886ca40189c7ef48a
Note: You can currently only restake and delegate your EIGEN via the EigenLayer dashboard.
If you’re interested in learning more about staking/restaking with Chorus One, simply reach out to us at staking@chorus.one and we’ll be happy to get back to you!
Additionally, if you’d like us to share further resources on any topic, please let us know!
Thanks for reading and see you next time!
About Chorus One
Chorus One is one of the biggest institutional staking providers globally, operating infrastructure for 50+ Proof-of-Stake networks, including Ethereum, Cosmos, Solana, Avalanche, and Near, amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures. We are a team of over 50 passionate individuals spread throughout the globe who believe in the transformative power of blockchain technology.
