Justin Sun Propels Liquid Staking into the Spotlight with a $376 Million Swell L2 Deposit

Tron founder Justin Sun has done it again: He moved the markets with a huge deposit into a protocol for liquid restaking. This has put Sun at the dead center of a booming DeFi niche: liquid staking.

Justin Sun: The Poster Child of Liquid Staking?

Sun, known for his love of Ethereum-based coins, has made a huge deposit of 120,000 eETH (valuing roughly at $376 million) into Swell L2—a new entrant making its name in the restaking game. This single deposit constitutes 46.6% of the total share that has ever been made to Swell L2.

Some may see this purely as a financial move, but Sun recently downplayed profit reasons. He positions himself as an advisor to these platforms, stressing liquid staking's potential to become a global revenue stream for institutions and a boon for the crypto community.

Sun envisions a future where staking and re-staking go mainstream. He predicts international companies will reinvest their profits into supporting developers and users of Tron. This collaborative ecosystem would foster prosperity throughout the crypto space.

Whether Sun was referring specifically to Swell L2 or liquid staking in general is unclear. However, his notably large deposit suggests that he could be speaking from experience.

Liquid Staking: Riding The DeFi Wave

The Ethereum staking system offers rewards and incentives for holding ETH, but access to these funds remains locked until the network transitions to Proof-of-Stake 2.0. Liquid staking protocols like Swell L2 offer a solution by issuing derivative tokens (eETH) that represent staked assets. These liquid tokens facilitate free trading, allowing users to earn staking rewards without locking up their holdings. This structure has driven the boom in liquid staking platforms.

Lido and EigenLayer are examples, both built on Ethereum. EigenLayer, which launched recently, already ranks second among Decentralized Finance (DeFi) protocols, with a Total Value Locked (TVL) of nearly $16 billion. Lido, the current leader, boasts a TVL of nearly $30 billion.

Growing Interest in Staking Competitors

EigenLayer's rapid rise reflects the surging interest in staking alternatives. Justin Sun's large deposit in Swell L2 could signal the first step for bigger players entering this rapidly maturing DeFi sector. There is no doubt that his hefty deposit is a strong impulse for a young protocol to gain public attention. However, further scrutiny raises some questions.

Discussions around this move often overlook potential downsides of liquid staking. These include the risks of smart contract exploits and the inherent volatility of derivative tokens like eETH, both of which can significantly impact investor returns.