Ethereum liquid restaking protocols experienced a significant increase in total value locked (TVL) in 2024, fueled by augmented demand for asset utility.
What is Liquid Restaking?
Liquid Restaking Tokens (LRTs) build on the foundation of Liquid Staking Tokens (LSTs). In liquid staking, stakers who want to maintain liquidity while participating in network security receive derivative tokens like stETH from Lido, representing their staked holdings. These tokens can be used in other DeFi activities like trading, lending, or yield farming, allowing holders to retain the liquidity of their staked assets.
Risks of Liquid Restaking
While these asset types offer flexibility, they come with risks, including depegging or price volatility of derivative tokens, potentially affecting their value. These risks are further amplified in LRTs due to exposure to multiple networks. Furthermore, failure in one network could negatively impact restaked assets and lead to compounded losses.
Ether.fi Holds Over 50% of LRT Market Share
The Liquid Restaking Protocol Ether.fi controls over 50% of the LRT market TVL. According to DefiLlama, the protocol manages $9.17 billion in restaked assets. A Node Capital report attributed the protocol’s success to its user-friendly model that simplifies complex restaking operations.
The growth in TVL for Ethereum liquid restaking in 2024 highlights the rapidly evolving opportunities in DeFi for making the most out of staked assets. However, the growth also comes with certain risks that investors need to consider.
