What Is Puffer Finance? How pufETH Liquid Restaking Works

When you deposit, Puffer mints pufETH to your wallet at the current exchange rate. The rate is the same for ETH, WETH and stETH, and different for wstETH ³. Rewards from Ethereum validators and from restaking go into the pool backing pufETH. That raises the ETH value of each pufETH rather than adding tokens to your balance ⁵⁶. Rewards also go to node operators, restaking operators, Puffer's Guardians and a protocol fee ⁶. The docs do not publish a fixed percentage for that fee.

Liquid restaking, in brief: staked ETH secures Ethereum, and restaking also commits it to secure other services ("AVSs") through EigenLayer in exchange for extra rewards. The trade-off is extra slashing risk, because misbehavior on those services can also cost ETH ⁵.

Puffer's documentation describes a permissionless validator set ²:

• Node operators can run a 32 ETH validator by posting 2 ETH plus prepaid "Validator Tickets".
• Stakers' deposits fund the remaining 30 ETH.
• The protocol says it caps itself at 22% of Ethereum's validator set.
• Puffer supports anti-slashing hardware for operators.

A small permissioned group called Guardians handles tasks Ethereum does not yet automate ⁷:

• ejecting validators;
• vetting new validator registrations;
• returning operator bonds.

A majority, for example 7 of 8, must agree before major actions ⁷. Puffer describes Guardians as temporary, to be phased out as Ethereum upgrades land ⁷.

You exit by converting pufETH back to WETH. There are two modes ⁴:

Illustration: exiting 10 pufETH instantly costs 0.1 pufETH-equivalent in fees plus gas. The standard route avoids that fee but locks your position for up to two weeks ⁴. You can also sell pufETH on a DEX. That price can differ from the protocol's rate, especially when liquidity is thin.

Puffer's contracts are upgradeable under these controls ⁸:

• Timelock: a 7-day delay on full upgrades.
• Operations multisig: run by the team, 3 of 6 signers.
• Community multisig: 3 of 6 signers drawn from Ethereum community members and auditing firms. It can veto team actions and bypass the timelock.
• Pauser multisig: a single signer of 9 can pause the contracts in an emergency.

In practice, a small group of signers can change the code you deposit into. BlockSec audited the core pufETH contracts and reported no high- or medium-risk issues ¹³. DefiLlama's hacks database has no entry for Puffer ¹². An audit is not a guarantee. pufETH also inherits risks from EigenLayer, from Lido's stETH for stETH deposits, and from validator performance.

DefiLlama's "Puffer Stake" data shows value locked peaked near $1.84 billion on June 6, 2024. It fell to about $97 million by January 1, 2026 and to about $27 million on October 23, 2026 ¹². Puffer's rollup, vault and preconfirmation products are tracked separately ¹². A smaller pool can mean thinner pufETH markets and more reliance on the standard withdrawal queue.

PUFFER is the governance token for the restaking protocol and Puffer's UniFi ecosystem. It has a maximum supply of 1 billion, and 10.23% circulated at launch ⁹. Allocations:

• 40% ecosystem and community;
• 13% for two airdrop seasons;
• 26% investors and 20% contributors, each vesting over three years with a one-year cliff;
• 1% Protocol Guild.

Locking PUFFER gives vlPUFFER voting power over fees, Guardians, operators and supported AVSs ⁹. You do not need PUFFER to stake.