The move creates a sharper divide between traditional Ethereum staking and the additional risks associated with restaking, as a proposal to reduce validator rewards triggers debate throughout the staking community.

Ether.fi, among the largest crypto staking platforms with approximately $3.55 billion in deposits, has separated restaking from its main token, weETH. The token will now represent a pure Ethereum staking position that earns only standard staking rewards.

Users who want access to enhanced yield opportunities will need to use a separate token, weETHs.

Ethereum staking requires users to lock ether to help secure the network while earning rewards. Restaking takes those same assets and extends their use to secure additional protocols, offering potentially higher returns but introducing extra risks.

Because restaking involves multiple layers of exposure, users may face penalties from more than one source, increasing the possibility of losing part of their holdings.

The update gives existing users a clearer choice between conventional staking and higher-risk restaking strategies. It also simplifies Ether.fi’s offerings for newcomers by making the difference between the two products easier to understand.

Before the change, weETH holders were automatically exposed to both staking and restaking risks. Going forward, weETH will provide standard staking exposure, while weETHs will target users seeking additional yield despite the increased risk.

Ether.fi currently generates around $223 million in annualized fees and approximately $51 million in annualized revenue. During the second quarter, the platform recorded $41 million in gross revenue and nearly $10 million in net income after accounting for rewards and expenses. However, only about $30,000 was returned to ETHFI holders through buybacks.

The decision comes as Ethereum’s staking framework faces renewed criticism.

Researchers, including an Ethereum Foundation contributor, have suggested removing staking rewards once half of all ether supply is locked. They argue that the current reward structure, which does not fall to zero, encourages excessive staking participation and could lead to greater concentration among large custodians.

Under the proposal, staking rewards would gradually decline and eventually reach zero once around 60 million ether is staked. Currently, roughly one-third of Ethereum’s supply is locked in staking contracts.

Ether.fi founder Mike Silagadze has criticized the proposal, arguing that it could disadvantage smaller stakers and weaken staking-focused platforms such as Ether.fi.