@n547852o
How diversified collateral (ETH vs. LST) affects yield stability?
Using a diversified basket of collateral, such as a mix of native ETH and various Liquid Staking Tokens (LSTs), can marginally improve yield stability through a dilution of idiosyncratic risk. If a specific LST (e.g., stETH) were to suffer a temporary depeg or protocol-specific issue, its impact would be limited to only a portion of the restaked portfolio. However, this diversification does little to mitigate systemic risk. In a broad market downturn or a restaking-specific crisis, all ETH-denominated assets (native ETH and LSTs) will likely be highly correlated. The primary benefit is protecting against a single point of failure in the liquid staking derivative ecosystem, not against the volatility of AVS rewards themselves.
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