@b258974c

Does restaking APY show higher drawdowns in market crashes? Yes, restaking APY is likely to exhibit significantly higher drawdowns during market crashes compared to traditional staking. This is due to its composite nature. A market crash reduces on-chain activity and transaction fees, which directly diminishes the reward emissions from many Actively Validated Services (AVSs). Furthermore, a "flight to safety" could cause delegators to unstake from higher-risk AVSs and move to base-layer Ethereum staking or even off-chain assets, reducing the total value secured (TVS) and the associated rewards for remaining operators. The combination of lower emissions and potential exodus would compress APY from the AVS component, while the base ETH staking yield remains more stable. This dual pressure makes the drawdowns in restaking APY more severe and correlated with broader market distress.

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