EigenLayer, a widely known restaking protocol on Ethereum, has seen the locked value in its smart contracts jump more than $1.8 billion since Monday when its developers uncapped all of the pools for different liquid staking tokens (LST).
EigenLayer’s total value locked (TVL) has increased in the past 24 hours to above $4 billion, the largest daily increase by dollar amount since the protocol launched its mainnet in July 2023, data from blockchain analytics firm DefiLlama shows.
A large part of the growth in EigenLayer’s total value locked comes from crypto denizens depositing liquid staking leader Lido’s derivative token, stETH, into the protocol. Per on chain intelligence firm Nansen, EigenLayer’s smart contract for Lido’s LST has increased by 136,008 stETH in the past 24 hours, making the smart contract the third largest holder of Lido’s flagship product with over 580,450 stETH.
Liquid staking tokens (LSTs) represent the combined value of a user’s ETH that has been deposited into Ethereum’s staking deposit contract plus accrued interest. LSTs can be used across many DeFi platforms as collateral, allowing those who stake their ETH to validate blocks on the Ethereum blockchain to retain liquidity.
EigenLayer currently allows people to deposit 12 different LSTs into its smart contracts, such as RocketPool’s rETH, Coinbase’s cbETH, and Swell’s swETH.
Caps to Eventually Be Eliminated
The EigenLayer team indicated they would reinstitute caps on their LST pools on Feb. 9 at 3 p.m. EST, but in the coming months, developers aim to permanently lift the pause on token staking and the caps on TVL, according to a blog post published on Monday.
“This unpause marks the temporary removal of TVL caps, paving the way for a future where pauses and caps are lifted permanently,” the EigenLayer team shared on X. “This puts the EigenLayer protocol at a critical juncture, seeking to balance neutrality with decentralization over the long-term.”
EigenLayer is a protocol that allows crypto investors to restake their LSTs to secure other chains and applications beyond Ethereum’s base layer. As a result, EigenLayer enables crypto investors to earn additional rewards on top of the revenue stream originating from their role in securing the Ethereum blockchain.
EigenLayer also has a points system to measure a user’s contribution to the staking protocol’s ecosystem. “While the point of the points is not explicitly known, it is expected that they represent a proportional share in a future EigenLayer token airdrop, similar to other points-based incentive programs in crypto like Blur, friend.tech, and Rainbow Wallet,” wrote Messari financial analyst Kunal Goel in a research report published last week.