Liquid resttaking protocols exceed $3.5 billion in TVL

The total value locked in liquid staking protocols has surpassed $3.5 billion, indicating Ethereum investors’ growing interest in this niche. Protocols such as Etherfi, Renzo, Kelp, Puffer and others have seen an increase in deposits over the past month. This increase is due to users choosing to use EigenLayer through these platforms, thereby maintaining access to their funds.

Etherfi has the highest TVL among these LRTs, at over $1.3 billion. Kelp has over $460 million in user deposits, while Renzo has a TVL of $346 million.

Puffer, the newest addition to the LRT landscape, has recently seen a rapid increase in deposits, reaching the billion dollar mark soon after launch. Other smaller LRT protocols include Bedrock with a TVL of $89 million, Swell at $66 million, Prime at $29 million and ClayStack at $6.8 million.

Liquid restaking allows holders of liquid staking tokens to stake their tokens on EigenLayer, thus contributing to its economic security. This is different from traditional liquid staking, where assets are staked through a staking service provider and receive tokens are received in return.

EigenLayer’s contribution to the growth of the TVL of these protocols is remarkable. It allows users to deposit and re-stake ether from various liquid staking tokens.

EigenLayer restaking allows Ethereum validators to use their ether stakes to secure other protocols. The goal is to use these funds to improve the security of third-party networks. The total value locked in EigenLayer now exceeds $7 billion.

Although the reststaking period for deposits to EigenLayer via liquid staking tokens recently opened temporarily, it is now closed. This is where LRTs come into play – they provide users with a method to deposit funds into Eigen when limits have largely been reached. This is because “native restaking”, which is done directly on EigenLayer from ether validator stakes, remains uncapped.

As a result, LRT protocols – such as EtherFi, Renzo and Kelp – continue to accept ether deposits, redeploy them on behalf of users and return a derivatives token along with a commitment to distribute points received from Eigen.

EigenLayer users earn points for their ether deposits, potentially increasing their chances of receiving a token from EigenLayer. Now many users are depositing into Eigen (via LRTs), hoping to receive rewards from the LRTs themselves and aiming for two airdrops in the process.

These protocols offer additional rewards by issuing two sets of points – one Own and one from the protocol itself. For example, by redeploying an LST like stETH on Kelp, users accumulate points from both EigenLayer and KelpDAO, allowing them to increase their chances of receiving rewards from both protocols.