Ethereum Staking Protocol EigenLayer Overtakes Aave in Crypto Value Amid DeFi Growth
Summary:
Crypto staking protocol EigenLayer surpasses lending platform Aave in Total Value Locked (TVL), reaching $10.4 billion after removing staking restrictions. Despite criticism regarding excessive leverage, EigenLayer observed a 382.5% growth. Liquid staking protocols dominate the DeFi space with $55 billion locked across around 160 protocols, mostly contributed by Lido.
Crypto staking initiative EigenLayer has exceeded financial lending platform Aave in terms of total value locked (TVL), amassing $10.4 billion in cryptocurrency after momentarily lifting a limitation on staking amounts. As of March 5, EigenLayer's TVL peaked at a record-breaking $11 billion, overtaking Aave's 21-month pinnacle of $10.7 billion and making it the second-biggest decentralized finance (DeFi) protocol in terms of TVL, coming in behind staking behemoth Lido, according to data from DefiLlama. Both TVLs have presently decreased slightly, with EigenLayer boasting $10.4 billion and Aave at $10.35 billion. EigenLayer's year began with a TVL of $1.1 billion and has since experienced an 844.6% growth.
EigenLayer, along with its less prominent competitor, Octopus Network, are restaking protocols that permit users to restake their tokens derived from prior stakings, like Lido Staked ETH (stETH) received by those staking Ether (ETH) on Lido. This method has sparked debate, with some Ethereum developers cautioning it creates excessive leverage, while supporters argue it can provide additional returns to those who have staked their ETH. EigenLayer's significant TVL surge began on February 5 when the protocol temporarily suspended its staking cap to encourage further growth, resulting in a 382.5% TVL increase.
Austin Federa, strategy head at Solana Foundation, questioned the method of calculating restaking TVL in a March 5 post following the overthrow of Aave by EigenLayer, expressing skepticism about counting staking-derived assets like stETH, as their value is technically locked within another protocol. Beside DefiLlama, Dune Analytics revealed that more than 115,000 unique depositors utilize EigenLayer, with 74% of staked tokens being Wrapped Ether (wETH), and stETH. WETH constitutes just over 41% of tokens locked on EigenLayer, with stETH making up just over 30%.
In contrast, Aave maintains above 5,700 daily active users, while Lido has less than 430 users, as per Token Terminal data. Aave has also encountered challenges after its long-term risk manager Gauntlet severed ties on February 21, citing difficulties maneuvering through "inconsistent guidelines and unwritten objectives of the largest stakeholders." Two months before the breakup, Gauntlet had entered a one-year contract worth $1.6 million with Aave. Gauntlet chose to team up with Morpho, a competing DeFi lending protocol, on February 28.
Predictably, liquid staking protocols, where users receive a token equivalent to their staked funds, occupy the largest share of DeFi protocol types with nearly $55 billion locked in about 160 protocols, primarily boosted by Lido, which has the biggest locked value at $35 billion. Meanwhile, restaking, which includes EigenLayer and Octopus Network only, is the sixth largest category after the 125 projects using collateralized lending to generate stablecoins.
Published At
3/6/2024 9:00:34 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.