The decentralized finance (DeFi) ecosystem is witnessing a significant surge in total value locked (TVL), approaching highs not seen since 2021. According to data from DefiLlama, the TVL spike has been driven by the adoption of liquid restaking tokens (LRTs) and the growth of Bitcoin-native layer 2 networks (L2s). The rising cryptocurrency prices due to 2024’s bull market have also contributed to the increase in TVL.
TVL Reaches $134 Billion, Marking a Nearly 150% Increase Year-to-Date
As of December 9th, the aggregate DeFi TVL stands at over $134 billion, marking a nearly 150% increase year-to-date according to DefiLlama. Although it still lags behind 2021’s highs of $170 billion, the data shows that the trend is pointing upwards.
The Rise of Liquid Restaking Tokens (LRTs)
Liquid restaking tokens (LRTs) have been a major contributor to the surge in TVL. LRTs allow users to take a token that has already been staked and use it to secure other protocols simultaneously. This innovative approach has given rise to an ecosystem of LRT protocols, such as EigenLayer, Ether.Fi, Renzo, and Kelp.
EigenLayer: The Largest Restaking Protocol
EigenLayer, the largest restaking protocol, launched in 2023 and has since bootstrapped more than $17 billion in TVL. This is a significant milestone for the DeFi ecosystem, demonstrating the potential of LRTs to drive growth and adoption.
Other Notable LRT Protocols
Ether.Fi holds over $9 billion in TVL, making it one of the most popular LRT protocols. Other notable mentions include Renzo and Kelp. According to Kairos Research, "Overall [Ether] TVL for the top 5 LRTs currently sits at around 3.38m ETH, worth around $12.5bn."
Total LRT TVL Exceeds $16 Billion
The total LRT TVL, including other types of restaking tokens, stands at over $16 billion according to DefiLlama. This is a significant increase from previous years and demonstrates the growing popularity of LRTs in the DeFi ecosystem.
Liquid Staking Tokens (LSTs) on Ethereum
Lido, an Ethereum liquid staking token protocol, has been DeFi’s single biggest TVL source with nearly $40 billion staked. Roughly 10% of Lido’s stETH LST has been restaked on EigenLayer according to data from EigenLayer’s website.
Bitcoin Liquid Staking Tokens (LSTs) and Layer 2 Networks
The adoption of Bitcoin liquid staking tokens (LSTs) is also growing quickly. According to Staking Rewards, the total TVL for Bitcoin LSTs stands at over $2.5 billion. CoreChain and Babylon are two popular layer 2 networks that offer tokenized claims on Bitcoin staked.
Lombard: The Most Popular Bitcoin LST
At around $1.15 billion in TVL, Lombard is the most popular among Bitcoin LSTs. It is followed by Solv, with a TVL of approximately $1 billion.
The Future of DeFi and Staking
"We’re still in the early innings for not only restaking, but crypto at large," said Kairos Research in a report shared with Cointelegraph. "In the future, institutions will have a plethora of risk-adjusted strategies to get the most out of staking their [Ether]."
The rise of LRTs and Bitcoin native layer 2 networks has brought new opportunities for users to stake and earn rewards. As the DeFi ecosystem continues to grow and mature, we can expect to see more innovative solutions emerge.
Related:
- Anchorage Digital to Support Liquid Ether Staking: Anchorage Digital is set to support liquid Ether staking, allowing users to stake their Ether without having to lock it up for extended periods.
- Liquid Restaking Tokens: Liquid restaking tokens are a new class of assets that allow users to take a token that has already been staked and use it to secure other protocols simultaneously.
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