What’s the standard deviation of monthly returns in restaking? This is currently unquantifiable due to a lack of historical data. Restaking is a nascent activity. A meaningful standard deviation requires a multi-year time series across different market cycles, which does not yet exist. This data gap is a major risk for participants.
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What’s the standard deviation of monthly returns in restaking? As a nascent financial primitive, a long-term, reliable standard deviation for monthly restaking returns is not yet available. However, we can infer its characteristics. It would be substantially higher than the ~1-2% annualized volatility of native ETH staking returns. Initial data from liquid restaking tokens (LRTs) and AVS reward simulations would likely show a monthly standard deviation in the high single or even double-digit percentages (e.g., 8-15% or more). This elevated figure captures the immense volatility from airdrop speculation, where the value of a single major airdrop can dwarf base yields for a month, and the severe downside risk from slashing events or AVS failures. As the market matures and more data accumulates, this metric will become a crucial tool for risk-adjusted return analysis.
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Do protocol upgrades cause temporary APY spikes or drops? Protocol upgrades can cause both temporary APY spikes and drops, creating volatility. They often cause a temporary drop in the immediate lead-up and execution of the upgrade. Operators may voluntarily unstake or become less active to avoid potential bugs associated with the new code, reducing the staking pool and creating short-term upward pressure on APY for those who remain staked. However, if the upgrade is successful and introduces new features that drive demand for AVS services or improve efficiency, it can lead to a sustained spike in APY afterwards. The uncertainty itself is a source of volatility, as the market prices in the risk of a failed upgrade versus the potential for enhanced protocol utility.
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