EigenLayer Emerges as Fourth-Largest DeFi Protocol, TVL Soars 7x in 2024
EigenLayer, the decentralized finance (DeFi) protocol, has experienced a tremendous surge in popularity, catapulting it to become the fourth-largest protocol in the industry. This impressive growth comes as Ethereum's restaking narrative gains momentum, with EigenLayer at the forefront of this trend. With a current total value locked (TVL) of $7.23 billion, EigenLayer has witnessed a threefold increase in the past two weeks alone, and an astounding 7x jump since the beginning of 2024. Notably, just a month ago, EigenLayer wasn't even a part of the top 10 list of DeFi projects.
Restaking Demand Fuels EigenLayer's Rise
EigenLayer's rise to prominence has been further fueled by the increasing demand for restaking in the DeFi space. Restaking involves repurposing staked ETH to provide security for other applications, allowing stakers to earn additional rewards on their investments. To participate in restaking, ETH must initially be staked on the Ethereum deposit contract. As the demand for EigenLayer grows, more ETH is locked up in staking activities. Consequently, over 25% of all ETH in circulation have been staked, with the upward trajectory of staked ETH mirroring EigenLayer's ascent.
ETH Validators Surge by 4x, Affirming EigenLayer's Influence
The number of ETH validators vying to enter the Ethereum network has experienced a staggering 4x spike in the last 10 days. These findings reinforce the theory that EigenLayer serves as the primary catalyst behind the increasing interest in staking activities. As more validators seek to participate in the network, EigenLayer's impact on the staking arena becomes more apparent.
Shrinking Liquid Supply Impacts ETH's Price Stability
As the demand for staking continues to surge, the amount of ETH available for active trading has witnessed a decline. The number of unique ETH deposit addresses has significantly decreased in the past 10 days. While this may deter active traders, it could have a positive impact on ETH's long-term price stability.
ETH Price Surges to $2,797 Amidst Growing Enthusiasm
At the time of writing, ETH was trading at $2,797, representing a 23% increase since the beginning of the month. This significant price surge corresponds with the growing enthusiasm surrounding EigenLayer and the restaking movement.
With EigenLayer emerging as one of the leading DeFi protocols and staking activities gaining traction, the Ethereum ecosystem is experiencing a paradigm shift. As the industry continues to evolve, all eyes are on EigenLayer and its role in shaping the future of decentralized finance.
Analyst comment
Positive news: EigenLayer has seen a significant increase in Total Value Locked (TVL) and has become the fourth-largest DeFi protocol. This growth is due to the rising popularity of Ethereum restaking, which involves repurposing staked ETH to provide security for other applications. The demand for EigenLayer indicates a greater number of ETH being locked up for staking, which is reflected in the steep rise of staked ETH graph in February. Additionally, the number of ETH validators looking to enter the network has significantly spiked in the last 10 days.
As an analyst, it is expected that the market for EigenLayer and ETH will continue to grow. The increased demand for staking and the shrinking liquid supply of ETH may contribute to long-term price stability for ETH. Thus, the market is likely to remain positive with further potential for growth.
