Within the Decentralized Finance (DeFi) sector, ethereum staking protocol EigenLayer has outperformed lending protocol aave, claiming the second-largest position by Total Value Locked (TVL) in the DeFi marketplace.
With an impressive $10.4 billion worth of crypto assets committed to the protocol, EigenLayer’s recent surge signifies a notable shift in the DeFi hierarchy, sparking intrigue and excitement within the crypto community.
Restaking Protocol EigenLayer Takes Center Stage
EigenLayer’s rise to prominence can be attributed to its strategic move to temporarily remove the cap on staking, enabling users to restake their already staking-derived tokens. This move propelled EigenLayer’s TVL to an unprecedented all-time high of $11 billion, eclipsing aave’s 21-month record of $10.7 billion TVL.
This surge in TVL underscores the growing appeal of restaking protocols, with EigenLayer experiencing a remarkable 382.5% increase in TVL since the cap was lifted.
EigenLayer’s meteoric rise to power has not been without controversy. ethereum developers have raised concerns over the proliferation of restaking protocols, citing potential dangers from excessive leverage. Proponents, however, argue that restaking offers additional rewards for users who have already staked their assets.
solana Foundation strategy head, Austin Federa, sparked a debate by questioning the methodology of calculating restaking TVL. He argued that staked-derived assets like stETH should not be considered as TVL because their value is technically locked on another protocol.
DeFi Protocol Landscape: A Shifting Terrain
EigenLayer’s sudden emergence as a leading player in the DeFi landscape highlights the evolving dynamics of this decentralized financial ecosystem. Liquid staking platforms, where users receive tokens in exchange for their staked funds, have emerged as key players within the DeFi sector, boasting a staggering $55 billion locked value across approximately 160 protocols.
EigenLayer’s overtaking of aave underscores the growing significance of liquid staking platforms within the DeFi ecosystem. Dune Analytics data reveals EigenLayer boasts over 115,000 unique depositors, with Wrapped Ether (wETH) and stETH accounting for 74% of staked tokens. In contrast, aave records over 5,700 daily active users, while Lido, the largest protocol by locked value, has under 430 users according to token Terminal data.
Challenges for aave
While EigenLayer revels in its success, aave grapples with its own challenges. The departure of its long-time risk manager, Gauntlet, on Feb. 21 has raised concerns within the community. Gauntlet cited difficulties navigating “inconsistent guidelines and unwritten objectives of the largest stakeholders” as the reason for their departure.
This split came just two months after Gauntlet inked a lucrative one-year contract with aave. Furthermore, Gauntlet’s partnership with rival DeFi lending protocol Morpho added to aave’s woes.
EigenLayer’s impressive surge in TVL cements its position as a formidable player in the DeFi landscape, overshadowing established protocols like aave. Its rise to power has sparked debate and scrutiny, but ultimately underscores the shifting dynamics within the DeFi ecosystem as restaking protocols continue to gain prominence.
As the DeFi space continues to evolve, it remains to be seen how protocols like EigenLayer will shape the future of decentralized finance.
