EigenLayer, an Ethereum staking protocol, has surged past lending protocol Aave in total value locked (TVL), reaching $10.4 billion worth of crypto committed to the protocol after temporarily removing a cap on user staking.
On March 5, EigenLayer reached an all-time high TVL of $11 billion, surpassing Aave’s 21-month high TVL of $10.7 billion, becoming the second-largest decentralized finance (DeFi) protocol by TVL behind staking giant Lido, according to DefiLlama data.
Restaking protocols like EigenLayer and its smaller rival, the Octopus Network, allow users to restake their already staking-derived tokens such as Lido Staked ETH (stETH). However, this practice has sparked controversy, with some Ethereum developers warning it creates excessive leverage while others argue it offers additional rewards to those who have already staked their ETH.
EigenLayer’s TVL began climbing on Feb. 5 after temporarily removing its staking cap, resulting in a 382.5% increase in TVL since then. Dune Analytics data shows EigenLayer has over 115,000 unique depositors, with 74% of staked tokens being Wrapped Ether (wETH) and stETH.
Solana Foundation strategy head Austin Federa challenged how restaking TVL is counted, suggesting that staking-derived assets like stETH should not be included in TVL calculations as their value is technically locked on another protocol.
Aave has faced challenges recently, with its long-time risk manager Gauntlet departing over difficulties navigating inconsistent guidelines and objectives of major stakeholders. Additionally, Aave’s daily active users outnumber those of Lido, suggesting different user dynamics between the protocols.
The rise of EigenLayer highlights the competition and innovation within the DeFi space, with protocols exploring different approaches to staking and liquidity provision. As the ecosystem evolves, debates over TVL calculation and protocol governance are likely to continue shaping the landscape.
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