ether.fi

Stage 0
TVL $5.7B
ether.fi
2026-01-28
Chains ethereum

Risk Assessment

Upgradeability ⚠
48h+ Timelock
Admin Control ⚠
Weak Multisig
Fund Access ⚠
Restricted
Audits ✓
Multiple
Oracle ✓
Decentralized
Track Record
2 years

ether.fi Risk Assessment

Overview

ether.fi is a decentralized, non-custodial liquid staking and restaking protocol. Users deposit ETH and receive eETH, which automatically accrues staking rewards and can be restaked on EigenLayer for additional yield. The protocol emphasizes staker control over validator keys.

ether.fi has grown rapidly to become one of the largest liquid restaking protocols, managing over $11B in assets.

Smart Contract Risk

Contract Architecture:

  • LiquidityPool manages ETH deposits and eETH minting
  • Upgradeable contracts with RoleRegistry access control
  • Integration with EigenLayer for restaking
  • Multiple contract modules for different functions

Code Quality:

  • Multiple audits from security firms
  • Enterprise-grade security emphasis
  • Open source on GitHub
  • Bug bounty program active

Attack Surface:

  • EigenLayer integration introduces restaking risks
  • eETH may diverge from 1:1 ETH during volatility
  • Slashing from misbehaving validators or AVS participation
  • Complex multi-protocol interaction surface

Admin/Governance Risk

Current Governance:

  • Team-controlled multisig (2/6 configuration)
  • No DAO established at time of initial assessment
  • Plans to establish decentralized governance
  • ETHFI token for future governance

Upgradeability:

  • Contracts upgradeable via timelock with role requirements
  • Plans to remove upgradability for enhanced security
  • Currently admin-controlled with documented intentions
  • Timelock provides some user protection

Trust Assumptions:

  • Significant trust in team multisig
  • Governance decentralization still in progress
  • Stakers maintain non-custodial ownership of ETH
  • Validator key control provides some protection

Oracle Risk

Decentralized Design:

  • No direct price oracle dependency for core staking
  • EigenLayer integration may introduce oracle requirements
  • Reward distribution uses validator performance data

Security Considerations:

  • eETH pricing determined by internal accounting
  • Market price may diverge from NAV during stress
  • DVT (Distributed Validator Technology) planned

Economic Risk

Liquidity Risk:

  • $11B+ TVL with rapid growth
  • eETH liquidity on major DEXs
  • Restaking introduces additional complexity
  • Withdrawal queue depends on validator exits

Restaking Risks:

  • EigenLayer slashing extends to eETH holders
  • Multiple AVS participation increases risk surface
  • No dedicated slashing bond per depositor
  • Yields not guaranteed (“not free APY”)

Operational History:

  • Launched 2023
  • Rapid TVL growth through 2024-2025
  • 78% QoQ increase in TVL (2025)
  • No major exploits of core contracts

Stage Assessment

Stage 0 Criteria:

  • Team-controlled multisig (2/6)
  • No established DAO governance
  • Relatively short track record (2 years)
  • Complex restaking risk model
  • Governance decentralization incomplete

Key Concerns:

  • Weak multisig structure for protocol of this size
  • Restaking adds EigenLayer dependency risks
  • No meaningful community governance yet
  • Rapid growth may outpace security maturation

Justification: ether.fi is classified as Stage 0 (Fully Assisted) due to its team-controlled multisig governance without established DAO, relatively weak 2/6 multisig configuration, and early operational history. While the protocol emphasizes non-custodial design and has not experienced exploits, users must trust the team significantly. As governance decentralizes and the multisig structure strengthens, the protocol may advance to higher stages.