Temporarily lifting the staking cap, EigenLayer TVL soared by US$1 billion in 8 hours

Author: Tom Mitchelhill, Cointelegraph; Compiler: Deng Tong, Golden Finance

The total locked value (TVL) of Eigenlayer, a liquidity re-pledge protocol based on Ethereum, temporarily canceled its The staking cap surged by a staggering $1 billion in just eight hours.

On February 5, EigenLayer announced that it would temporarily increase the staking limit of 200,000 Ethereum per protocol until February 9. The agreement states that this temporary removal “paves the way for a future” in which all staking caps will be permanently lifted.

According to data from DefiLlama,within 8 hours of the announcement, the protocol’s TVL went from approximately 2.5 billion to approximately 2.5 billion as investors poured their liquid ETH tokens into the protocol. The U.S. dollar surged to $3.58 billion at the time of publication. The huge increase marks a staggering $1.6 billion increase last week.

TVL on EigenLayer grew to $3.58 billion as of February 5, up from $248 million in December. Source: DeFiLlama

The EigenLayer protocol allows investors to earn additional income by re-staking ETH to secure other networks. As of publication, EigenLayer supports liquid staking tokens such as Lido DAO Staked ETH (stETH) and Swell Stated Ether (swETH).

Currently, the ETH pledged by Lido is the most popular pledged token on EigenLayer, accounting for more than $1.2 billion of EigenLayer’s total TVL value. Swell’s staked ETH is the second largest token in the protocol, with a total TVL of $392 million.

Restaking works by providing investors with interest on locking up their existing liquid staking tokens, which are then used to assist in validating, lending, and providing liquidity on other blockchain networks sex.

Although EigenLayer is widely seen as providing a novel use case for ETH staking tokens, market commentators and developers have raised concerns about the protocol's mechanics, saying that high re-staking is similar to lever.

Last May, Ethereum co-founder Vitalik Buterin warned that a significant increase in re-staking and the excessive use of data or price oracles could pose significant "systemic risks" to the Ethereum ecosystem. ".

EigenLayer’s testnet was launched on April 7, 2023, and the protocol’s mainnet was launched two months later on June 14. Since then, the protocol’s TVL has grown by a staggering 21,623%, reflecting the broader cryptocurrency market’s enthusiasm for restaking.