The shift draws a clear line between basic Ethereum staking and the added risks of restaking, as a new proposal to limit validator rewards sparks division across the staking sector.
Ether.fi, one of the largest crypto staking platforms with roughly $3.55 billion in deposits, has removed restaking from its core token, weETH. The token now represents a simple staking position that earns standard Ethereum rewards only.
Users looking for additional yield must now hold a separate token, weETHs.
Staking involves locking up ether to secure the Ethereum network in exchange for rewards, while restaking reuses the same assets to secure other protocols for extra returns.
This added yield comes with higher risk, as users face potential penalties from both layers, increasing the chances of losing part of their stake.
For existing holders, the update creates a clearer distinction between low-risk staking and higher-risk restaking exposure. For new users, it simplifies the Ether.fi product suite and makes it easier to understand.
Previously, holding weETH meant being exposed to both staking and restaking risks by default. Now, users can choose between weETH for standard staking or weETHs for higher rewards along with added risk.
Ether.fi generates about $223 million in annualized fees and around $51 million in annualized revenue. In the second quarter, it posted $41 million in gross revenue and nearly $10 million in net income after rewards and costs, while distributing only about $30,000 to ETHFI holders through buybacks.
The move comes as Ethereum’s staking model faces increasing scrutiny.
A group of researchers, including one from the Ethereum Foundation, proposed ending staking rewards once half of all ether is locked. Under the current system, rewards never drop to zero, encouraging continued staking and, they argue, concentrating holdings among large custodians.
Their proposal would gradually reduce rewards until they disappear entirely at roughly 60 million ether staked. Currently, about one-third of the total supply is locked.
Ether.fi founder Mike Silagadze has pushed back against the proposal, warning it could squeeze out smaller stakers and weaken staking-based products, including his own.
