Why now
Restaking changed the shape of ETH collateral. A restaked position can expose the same economic capital to multiple services, operators, networks, and slashing policies. LRTs make those positions composable, but they also compress several risk decisions into a token that can look deceptively simple from the outside.
For lending markets, that compression creates a methodology gap. The market may observe a liquid token, a price feed, and an ETH-denominated redemption path, while the actual risk surface depends on AVS allocations, operator behavior, vault guarantees, slash timing, exit queues, and insurance capacity.
The failure mode
The unsafe shortcut is to treat an LRT as an ETH-like collateral asset with a small haircut. That shortcut fails when the relevant loss mode is not normal market volatility. Slashing, delayed exits, correlated operator exposure, and shared collateral across multiple networks can all affect solvency before a generic liquidation model has enough signal.
An AVS-aware market starts from a different assumption: the price feed is only one input. LTV should be downstream of restaking exposure, not upstream of it.
Why existing categories are not enough
Traditional ETH money markets primarily care about spot liquidity, oracle quality, liquidation depth, borrow caps, and volatility. Those controls remain necessary, but they do not answer restaking-specific questions:
| Question | Why it matters |
|---|---|
| Which AVSs or networks can slash the underlying position? | A collateral asset can be exposed to loss conditions outside normal price movement. |
| How much stake is slashable at the relevant capture timestamp? | Current balance alone may not describe the active guarantee. |
| Can one network’s penalty reduce the guarantee available to another? | Shared collateral creates correlated impairment risk. |
| Are withdrawals still slashable during an epoch or delay window? | Exit timing can affect borrower and supplier solvency assumptions. |
| Is there insurance capacity for the specific slash surface? | A reserve that is not mapped to the risk cannot be treated as coverage. |
The opportunity
The same details that make LRT collateral harder to underwrite also make it a better candidate for specialized infrastructure. If the market can represent AVS exposure explicitly, it can assign collateral factors with more precision, separate conservative and aggressive LRTs, price looping risk more honestly, and route fees into insurance where the slash surface is actually created.
Lyrasing’s documentation therefore starts with information architecture and terminology before formulas. The methodology pages that follow should be able to reference stable terms for AVS exposure, collateral factor, insurance pool, and oracle/risk methodology without re-litigating definitions on every page.
Design constraint
The protocol is not launched. There are no deployed contracts, supported LRTs, live parameters, or production oracle claims in this repository. The useful work now is to define the methodology envelope precisely enough that later protocol implementation can be reviewed against it.