Nektar Network FAQ
What is restaking?
Stakers offer economic security to the network while earning additional rewards with their capital. Through restaking, this security is enhanced, and developers can easily utilize this network of trust.
As a user, you first stake your ETH to earn the base yield for securing the network. Then, you can choose other commitments to participate in using the same stake. However, any malicious actions can result in slashing (losing a portion of your stake). Each of these additional services is called an Actively Validated Service (AVS).
AVSs also determine something called an "unbonding period." This prevents malicious actors from quickly unstaking and withdrawing funds before penalties are applied. After you unstake, you must wait through the unbonding period before you can finally withdraw your funds.
As a user, you first stake your ETH to earn the base yield for securing the network. Then, you can choose other commitments to participate in using the same stake. However, any malicious actions can result in slashing (losing a portion of your stake). Each of these additional services is called an Actively Validated Service (AVS).
AVSs also determine something called an "unbonding period." This prevents malicious actors from quickly unstaking and withdrawing funds before penalties are applied. After you unstake, you must wait through the unbonding period before you can finally withdraw your funds.
What are the risks involved in restaking in AVSs?
- Slashing: Restaking involves committing your already-staked funds to additional services. That means if you misbehave or fail to meet the requirements of any of the services you're restaking with, your initial stake can get slashed (penalized). This amplifies the potential loss compared to just regular staking.
- Smart contract risk: Restaking platforms and the Actively Validated Services (AVSs) you interact with rely on smart contracts. Vulnerabilities or bugs in these contracts can lead to loss of funds, even if you didn't do anything wrong.
- Liquidity risk: Restaking often involves longer lockup periods (unbonding periods) before you can withdraw your stake. This means your funds are less liquid and might be inaccessible during market volatility or if you need them urgently.
How does Nektar Network depend on Ethereum?
Nektar Network heavily depends on Ethereum in several ways:
Nektar Network can be thought of like an additional layer built on top of Ethereum. It utilizes Ethereum's security foundation, and its existing validator set, allowing users to restake their ETH to provide security for an array of other services.
- Base Security: Nektar Network leverages the security guarantees provided by Ethereum's Proof-of-Stake consensus mechanism and DVT. Stakers who decide to restake their ETH on Nektar Network essentially trust that the underlying Ethereum network will remain secure. This allows Nektar Network to offer extra services without compromising on the fundamental security layer.
- Shared Validator Set: Ethereum's existing validators are the ones who can participate in Nektar Network. This means the security of Nektar Network services is directly linked to the strength and decentralization of Ethereum's validator.
Nektar Network can be thought of like an additional layer built on top of Ethereum. It utilizes Ethereum's security foundation, and its existing validator set, allowing users to restake their ETH to provide security for an array of other services.
Is Nektar an LRT?
No. Nektar Network is more like LRT factory, providing a platform that facilitates the creation and launch of LRTs. This distinction is crucial because positions Nektar Network as an infrastructure layer that enables services to be built on top.
What makes Nektar unique?
The Nektar Network is one of the easiest and most cost efficient ways to access a diversified set of operators leveraging Ethereum’s security.
From a restaker point of view the Nektar Network offers one of the most resilient restaking mechanisms in the market while for an AVS is an extremely convenient cost efficient way to access a set of operators whose performance and reliability can be assessed through their participation in the Diva Staking protocol.
From a restaker point of view the Nektar Network offers one of the most resilient restaking mechanisms in the market while for an AVS is an extremely convenient cost efficient way to access a set of operators whose performance and reliability can be assessed through their participation in the Diva Staking protocol.