Eigenlayer’s Ethereum Protocol Sees Explosive Growth In Total Value Locked
After Eigenlayer temporarily removed a cap aimed at preventing centralization, the Ethereum layer 2 protocol witnessed a nearly doubled Total Value Locked (TVL) by allowing the “restaking” of staked ether (ETH) to secure other blockchains.
In just 24 hours, Eigenlayer’s TVL surged from $2.16 billion to $3.84 billion, driven by stETH, a liquid staking token from Lido contributing $560 million to new deposits. The protocol, which introduced caps last year to prevent token dominance, resumed token restaking while suspending the ETH cap for a week. Eigenlayer plans to permanently remove caps, encouraging organic demand while implementing new limits to maintain governance decentralization.
The Ethereum-based protocol has attracted attention as part of the growing trend of “shared security” protocols, leveraging Ethereum’s staked ETH to secure other chains and earned $50 million in Series A funding. Despite ongoing concerns, substantial daily investments continue, prompting the team to reimpose a temporary cap on February 9 as they seek a balance between neutrality and decentralization. The protocol’s future direction hinges on community decisions.
Clever Robot News Desk 7th February 2024