Liquid restaking protocols surge past $3.5 billion in total value locked

The total value committed to cash withdrawal protocols has exceeded $3.5 billion, indicating the growing interest in this niche among Ethereum investors.

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, allowing them to maintain access to their funds.

Etherfi has the highest TVL among these LRTs, with a value of 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, recently saw a rapid increase in deposits, reaching the billion dollar mark shortly after launch. Other smaller LRT protocols include Bedrock with a TVL of $89 million, Swell of $66 million, Prime of $29 million and ClayStack of $6.8 million.

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

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

By retaking EigenLayer, Ethereum validators can 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 captured in EigenLayer now exceeds $7 billion.

Although the withdrawal period for deposits to EigenLayer via liquid staking tokens was recently opened temporarily, it is now closed. This is where LRTs come in: 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 ethervalidator stakes, has no limit.

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

Focused on rewards

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), looking for rewards from the LRTs themselves and looking for two airdrops. “The potential for retroactive airdrops from LRT protocols makes them attractive with little additional economic risk,” noted Eden Au, research director at The Block.

These protocols offer additional rewards by issuing two sets of points: one from Own and one from the protocol itself. For example, by rerunning an LST like sETH on Kelp, users collect points from both EigenLayer and KelpDAO, potentially increasing their chances of earning rewards with both protocols.