Ethereum (ETH) restaking protocols have registered an astronomical surge in Total Value Locked (TVL). In 2024, the TVL witnessed a staggering increase of approximately 6,000%, driven by high demand for staked asset utilities.
Explosive Growth of Liquid Restaking TVL
DefiLlama data revealed that the value grew from hundreds of millions in January to tens of billions by December 2024. Notably, on January 1, liquid restaking TVL on the Ethereum network was almost $284 million. The figure has grown to $17.26 billion since December 15, 2024.
This represents almost 60-fold growth. A growth credited to the utility of liquid restaking tokens (LRTs). The attraction of LRTs is that they simplify the complexities of traditional ETH staking while increasing capital efficiency in decentralized finance (DeFi).
For clarity, LRTs build on the foundation of liquid staking tokens (LSTs). In liquid staking, stakers desiring to maintain liquidity receive derivative tokens like stETH from Lido while participating in network activities. These represent their staked holdings.
Such tokens become usable in other DeFi activities such as trading, lending, or yielding farming. The aim is to allow holders to retain the liquidity of their staked assets.
Liquid Restaking on Ethereum
Liquid restaking tokens take the utility of the assets a notch higher. In liquid restaking, users who already staked ETH to secure Ethereum could also get to stake the derivative tokens they received. This allows them to participate in securing an application-specific blockchain or a layer-2 network.
On the surface, these asset types offer flexibility. However, they have embedded risks, including the depegging or price volatility of derivative tokens. This has the potential to affect their value. LRTs increase this risk potential more as they are exposed to multiple networks. As such, failure in one network could hurt restaked assets, resulting in compounded losses.
Ethereum Price Trends Amid Restaking Surge
Meanwhile, at the time Ethereum’s liquid restaking registered this astronomical growth, ETH price climbed from $2352.59 to its current level. The coin breached the $4,000 level in early March before suffering a decline that saw its price plunge to $2,223 by September.
However, amid broader bullish sentiments, ETH has rebounded well and soared to the $4,000 mark. At the time of writing, ETH is exchanging hands at $3,894.95.
The post Ethereum Liquid Restaking TVL Skyrockets from $284M to $17B in 2024 appeared first on TheCoinrise.com.
