Table of Contents
ToggleKey Takeaways:
- DeFi TVL Surge in 2024: Total value locked (TVL) in DeFi has risen nearly 150% year-to-date, driven by a bull market, liquid restaking tokens (LRTs), and Bitcoin-native layer 2 solutions.
- Liquid Restaking Tokens’ Role: LRTs like EigenLayer and Ether.Fi are key drivers, collectively holding over $16 billion in TVL. EigenLayer alone has amassed $17 billion since its 2023 launch.
- Bitcoin Layer 2 Networks’ Impact: Bitcoin-native L2s like CoreChain and Babylon are contributing $2.5 billion in TVL, with platforms like Lombard and Solv leading in adoption and market share.
- Ethereum’s Dominance in Liquid Staking: Lido remains the largest staking protocol with $40 billion staked. Around 10% of its stETH tokens have been restaked through EigenLayer, reflecting DeFi’s growing sophistication.
- Future Trends and Innovations: As institutions adopt DeFi solutions, strategies like restaking are expected to expand. The market could surpass 2021’s peak TVL of $170 billion in the near future.
Total value locked (TVL) in decentralized finance (DeFi) protocols has surged nearly 150% this year, approaching levels not seen since 2021. The increase, driven by liquid restaking tokens (LRTs) and Bitcoin-native layer 2 networks (L2s), is a notable indicator of DeFi’s rapid growth and resilience in the current bull market.
Rise of Liquid Restaking Tokens
The primary driver behind this impressive TVL growth is the adoption of liquid restaking tokens. EigenLayer, a leading restaking protocol launched in 2023, has accumulated over $17 billion in TVL, showcasing the significant demand for restaking services. Liquid restaking involves using staked tokens as collateral to secure multiple protocols simultaneously, enhancing the efficiency and utility of staked assets.
Protocols like Ether.Fi, which mint tradeable tokens representing claims on restaked assets, have also contributed to the LRT ecosystem. As of December 9, Ether.Fi holds more than $9 billion in TVL. Other notable LRT protocols include Renzo and Kelp. Kairos Research highlights that the top five LRTs collectively hold around 3.38 million ETH, valued at approximately $12.5 billion. Total LRT TVL across various tokens exceeds $16 billion, marking a significant portion of the decentralized finance (DeFi) landscape.
Bitcoin Layer 2 Networks and Staking
Bitcoin layer 2 networks have also played a crucial role in boosting DeFi TVL. Bitcoin liquid staking tokens (LSTs), which are tokenized claims on Bitcoin staked to L2s, have rapidly gained popularity. With a TVL exceeding $2.5 billion, Bitcoin LSTs are quickly becoming a substantial segment of the DeFi market.
CoreChain and Babylon are prominent L2s offering staking rewards, with Lombard leading the pack among Bitcoin LSTs with a TVL of $1.15 billion. Solv follows closely, holding around $1 billion in TVL. These platforms provide additional layers of security and scalability for Bitcoin, facilitating its integration into the DeFi ecosystem.
Key Players in Liquid Staking
Lido, a liquid staking token (LST) protocol for Ethereum, remains the largest single source of TVL in DeFi, with nearly $40 billion staked. Approximately 10% of Lido’s stETH has been restaked on EigenLayer, further amplifying its impact on the DeFi market.
The rise of liquid staking and restaking protocols reflects the growing sophistication and diversification of DeFi strategies. As institutions seek to maximize returns on their staked assets, these protocols offer innovative solutions that enhance liquidity and risk management.
Read more: What is DeFi Staking
Future Outlook
The bullish momentum observed in 2024 has positioned DeFi for continued growth. With the aggregate DeFi TVL standing at over $134 billion, it is inching closer to the 2021 peak of $170 billion. The sustained interest in liquid restaking and Bitcoin L2s suggests a robust and evolving DeFi ecosystem.
Kairos Research notes that the current phase of restaking is just the beginning. As more institutions adopt risk-adjusted strategies for staking their assets, the DeFi market is expected to see further innovation and expansion. The integration of advanced financial instruments and the maturation of blockchain technologies will likely drive the next wave of growth in the DeFi sector.
In conclusion, the resurgence of DeFi TVL highlights the sector’s dynamic nature and its capacity to adapt and thrive in changing market conditions. The advancements in liquid restaking and Bitcoin L2s are set to play pivotal roles in shaping the future of decentralized finance, offering new opportunities for investors and developers alike.
Source: CoinTelegraph
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