Monday, March 4, 2024
No menu items!
HomeBlockChainEigenLayer TVL rockets $1B after quickly eradicating staking caps

EigenLayer TVL rockets $1B after quickly eradicating staking caps

Ethereum-based liquid restaking protocol Eigenlayer’s total-value locked (TVL) hassurged by a staggering $1 billion in simply eight hours after the protocol quickly eliminated its staking cap. 

On Feb. 5, EigenLayer introduced that it could quickly increase its 200,000 Ether (ETH) per protocol staking cap till Feb. 9 in a bid to “invite natural demand” to the community. The protocol mentioned this non permanent removing is “paving the way in which to a future” the place all staking caps are completely eliminated.

Within the eight hours following the announcement, the protocol’s TVL surged from roughly $2.5 billion to $3.58 billion on the time of publication, as traders funneled their respective liquid staked ETH tokens into the protocol, per DefiLlama information. This outsized development marks a staggering $1.6 billion enhance final week.

TVL on EigenLayer has grown from $248 million in December to $3.58 billion as of Feb. 5. Supply: DeFiLlama

EigenLayer is protocol that enables traders earn extra yield on their staked ETH tokens by restaking them to safe different networks. As of the time of publication, EigenLayer helps liquid staking tokens equivalent to Lido DAO’s staked ETH (stETH) and Swell Said Ether (swETH).

Associated: Ethereum futures premium drops to 3-month low — Is ETH undervalued?

Lido Staked ETH at present stands as probably the most restaked token on EigenLayer, accounting for greater than $1.2 billion value of EigenLayer’s complete TVL. Swell Staked ETH is the second largest on the protocol, accounting for a complete TVL of $392 million.

Restaking works by offering traders with curiosity for locking up their present liquid staking tokens, after which utilizing the tokens to help with validation, lending and liquidity on different blockchain networks.

Whereas EigenLayer is extensively thought to be offering a novel use case for staked ETH tokens, market commentators and builders alike have raised their considerations with the mechanics of the protocol, describing excessive volumes of restaking as being akin to leverage.

In Might final yr, Ethereum co-founder Vitalik Buterin warned {that a} vital enhance in re-staking, in addition to the overuse of information or worth oracles may introduce main “systemic dangers” to the Ethereum ecosystem.

EigenLayer’s testnet was launched on April 7, 2023, and the protocol’s mainnet launched two months afterward June 14. Since then, the protocol’s TVL has grown a staggering 21,623%, reflecting the passion for restaking among the many wider crypto market.

Journal: Ethereum restaking — Blockchain innovation or harmful home of playing cards?