Kelp DAO Restaked ETH Liquid Staking

rsETH is a Liquid Restaked Token (LRT) issued by Kelp DAO that represents a claim on ETH restaked across multiple Actively Validated Services (AVS) via EigenLayer. When users deposit liquid staking tokens (such as stETH or ETHx) into Kelp DAO, they receive rsETH in return. The underlying assets are restaked on EigenLayer, simultaneously earning Ethereum base staking yield and additional AVS restaking yield.

rsETH is a reward-bearing token, meaning its value relative to ETH increases over time as the underlying restaked positions accumulate rewards. This makes rsETH suitable for institutional treasury management, as it delivers compounding yield without requiring manual claiming or reinvestment.

Liquid staking involves depositing ETH into a protocol (e.g., Lido, Rocket Pool) that stakes it on the Ethereum Beacon Chain and issues a liquid staking token (LST) representing the staked position. The yield comes solely from Ethereum consensus and execution layer rewards.

Restaking extends this model by taking LSTs and depositing them into EigenLayer, where they secure additional protocols known as Actively Validated Services (AVS). This creates a layered yield structure:

• Layer 1: Ethereum base staking yield
• Layer 2: AVS restaking yield (variable, dependent on AVS demand)

rsETH abstracts this complexity into a single token, enabling institutional allocators to access the full restaking yield stack without managing multiple protocol interactions or AVS selections.

EigenLayer is a restaking protocol on Ethereum that allows staked ETH and LSTs to be reused as cryptoeconomic security for additional protocols (Actively Validated Services, or AVS). AVS operators leverage EigenLayer's pooled security rather than bootstrapping their own validator sets.

Kelp DAO integrates with EigenLayer by restaking deposited LSTs across a curated set of AVS protocols. rsETH holders benefit from:

• Ethereum base staking rewards
• AVS restaking rewards distributed across multiple services
• Kelp Miles and EigenLayer points (subject to program availability)

The diversified AVS allocation managed by Kelp DAO reduces single-AVS concentration risk, which is a critical consideration for institutional risk assessment frameworks.

rsETH risk profile spans the following categories:

Smart contract risk: rsETH interacts with multiple protocol layers: Kelp DAO contracts, EigenLayer contracts, and underlying LST contracts. Each layer introduces smart contract surface area. Kelp DAO's contracts have been audited, but the composability of multiple protocols compounds residual risk.

Slashing risk: Restaked assets on EigenLayer are subject to slashing conditions defined by each AVS. If an AVS operator misbehaves or fails to meet its validation requirements, a portion of the restaked collateral may be slashed. Kelp DAO mitigates this through diversified AVS allocation and operator selection criteria.

Liquidity and depegging risk: rsETH trades on secondary markets and its price may deviate from its underlying NAV during periods of market stress or low liquidity. Institutional holders should evaluate available exit liquidity on DEXs and the protocol's redemption mechanism before sizing positions.

Operator and counterparty risk: Kelp DAO manages the restaking strategy, including AVS selection and operator delegation. Institutional allocators should assess the governance structure, key management practices, and operational security of the Kelp DAO team. Evaluating restaking operators through the Staking Rewards Verified Staking Provider (VSP) Program can support due diligence.

Protocol dependency risk: rsETH's yield generation depends on the continued operation and security of EigenLayer. Any disruption to EigenLayer's protocol or governance could impact rsETH's ability to generate restaking yield.

rsETH generates yield from multiple sources, stacked into a single token:

• Ethereum consensus rewards: The underlying LSTs (stETH, ETHx, etc.) earn base Ethereum staking yield from block proposals and attestations.
• Execution layer rewards: Priority fees and MEV extraction contribute additional yield to the underlying staked ETH positions.
• AVS restaking rewards: EigenLayer distributes rewards from AVS protocols that utilize restaked collateral for security. These rewards vary based on AVS demand and fee structures.

As a reward-bearing token, rsETH's exchange rate against ETH increases over time as these rewards accrue. There is no manual claiming required. Model expected yields on the Staking Rewards Calculator.

rsETH serves multiple functions for Proof-of-Stake yield exposure:

• Treasury yield optimization: rsETH provides a single-token vehicle for accessing layered ETH yield (staking + restaking) without managing multiple protocol positions or validator infrastructure.
• DeFi composability: rsETH can be deployed as collateral in lending protocols (Aave, Morpho), used in liquidity provision, or integrated into structured products. This capital efficiency is valuable for institutional DeFi strategies.
• Diversified restaking exposure: Rather than selecting individual AVS operators, rsETH provides exposure to a curated, diversified set of AVS protocols managed by Kelp DAO's strategy.
• Operational simplicity: No validator infrastructure, no manual reward claiming, no AVS selection required. rsETH is an ERC-20 token compatible with standard custody solutions and portfolio management systems.

For infrastructure risk certification and validator selection due diligence, refer to the Staking Rewards VSP documentation.

rsETH liquidity is available through two primary channels:

• Secondary market swaps: rsETH can be swapped for ETH or other assets on decentralized exchanges. Liquidity depth varies by venue and market conditions.
• Protocol redemptions: Kelp DAO offers a redemption mechanism to convert rsETH back to underlying LSTs. Redemption timelines depend on EigenLayer's withdrawal queue and the unbonding periods of the underlying staking protocols.

Institutional holders should note that immediate liquidity is market-dependent. During periods of high redemption demand or market stress, DEX liquidity may be insufficient for large exits, and protocol redemptions may involve multi-day processing times due to EigenLayer's withdrawal mechanics. Position sizing should account for these liquidity constraints.