Andreessen Horowitz Leads $100M Investment in Ethereum's Largest Restaking Protocol, EigenLayer
Summary:
Andreessen Horowitz has led a $100 million funding round in Ethereum's largest restaking protocol, EigenLayer. The investment represents the first rise in crypto venture capital funding since March 2022. The protocol allows for restaking of liquid staking derivative tokens, with these assets also being used in other decentralized finance (DeFi) protocols to earn extra yield. EigenLayer is currently the third-largest protocol on Ethereum with a total value locked (TVL) of $7.91 billion. Despite recent growth, plans are in place to increase its capacity by removing staking limits.
Andreessen Horowitz, the venture capital powerhouse, recently led a $100 million investment round in EigenLayer, the most significant restaking system on Ethereum by total value locked (TVL). Eyewitnesses on Feb. 22 said Andreessen Horowitz was the only contributor to the fund round. EigenLayer previously secured a $50 million investment in March, backed by Blockchain Capital. Venture capital investments concerning crypto firms experienced an uptick in the final quarter of 2023, increasing by 2.5% to a staggering $1.9 billion, according to PitchBook data. This surge marked the first rise in venture capital-backed crypto investments since a year prior, in March 2022. Some industry experts point to the January launch of the inaugural spot Bitcoin exchange-traded funds (ETFs) as a factor. Ali Yahya, a top player at Andreessen Horowitz, stated in a Bloomberg interview the collaboration could pave the avenue for innovative application development. He explained the possibilities for creating a diverse array of applications built atop EigenLayer, with users staking capital to earn rewards from emerging services. EigenLayer, established in 2021, provides a platform for validators and stakers to restake liquid derivative tokens like Lido Staked ETH and RocketPool's rETH to validate and secure other networks. Users can also employ these assets in various decentralized finance (DeFi) protocols to garner additional yields. With a current TVL of $7.91 billion, EigenLayer now stands as the third-biggest protocol on Ethereum. EigenLayer's TVL increased by 4.30% in the 24 hours to 2:15 PM CET and climbed by over 347% in the previous month, according to data from DefiLlama. After discontinuing the staking limit to boost organic growth, EigenLayer's TVL began to rise on Feb. 5, according to an official statement. During this restaking window, EigenLayer's TVL shot up over 181% to $6.05 billion on Feb. 10, up from $2.15 billion on Feb. 5. Despite introducing a new staking cap, plans are in place to eradicate this restriction permanently. Restaking protocols form the sixth-largest protocol category on DefiLlama, with a total TVL of $7.94 billion; EigenLayer holds 98% of it. Liquid staking protocols hold the top spot, with a combined TVL of $45.7 billion.
Published At
2/22/2024 4:35:22 PM
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