The total amount of value committed to the Ethereum liquid repossession protocol Puffer Finance has reached $850 million, making it the second largest protocol of its kind.
Puffer Finance, which launched on February 1, allows users to deposit ether and receive a liquid staking token that earns yield from staking and withdrawing ETH (where the same ETH is staked with multiple protocols to earn additional yield).
On day one, Puffer Finance saw a TVL of $146 million, according to DefiLlama. A few days later, it had overtaken similar projects Renzo and Kelp DAO to break into second place among liquid recovery protocols. On February 10, it passed the $850 mark and remains not far from market leader ether.fi, which has $1.04 billion in TVL – a figure that increase exponentially.
To encourage adoption, Puffer Finance has implemented a five-phase points program, awarding points to those who deposit their assets and interact with the platform – something that may have driven TVL’s rise.
Points are a growing trend in the industry, where they are often used prior to an airdrop to decide how it will be allocated. However, airdrops are not typically confirmed in advance and points programs do not necessarily result in them.
Anti-slash tool
Another reason behind the increase in adoption could be Puffer Finance’s anti-slashing tool. “In theory, this should allow validators to reduce the risk of cuts while improving capital efficiency,” Charles Booth, growth at Parsec Finance, noted in a recent newsletter.
“While some portion of TVL growth will be driven by airdrop farmers looking for a piece of the native Puffer governance token, the rapid pace of TVL growth could cause the market to tip its hand towards regard of which could be the leading [native liquid restaking protocol] moving forward,” he said.
Ahead of the launch, Puffer Finance announced investments from Binance Labs. Before the Binance Labs investment, Puffer raised money from other high-profile investors including Brevan Howard Digital, Jump Crypto and Lightspeed Faction. The project increased a $5.5 million seed round last August and an initial $650,000 pre-seed round.
