Ethereum Liquid Restaking TVL Surges Dramatically from $284 Million to Over $17 Billion in 2024

As the demand for staked asset utility continues to grow significantly, Ethereum liquid restaking protocols have seen their total value locked (TVL) increase by almost 60-fold in 2024. According to data from decentralized finance (DeFi) aggregator DefiLlama, liquid restaking TVL on the Ethereum network was approximately $284 million on January 1st. By December 15th, that figure had climbed nearly 60-fold, reaching $17.26 billion.

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The Rise of Liquid Restaking

The increase in liquid restaking could be attributed to the utility of liquid restaking tokens (LRTs). These assets simplify the complexities of traditional EtherETH staking and increase capital efficiency in DeFi. As more users participate in Ethereum’s liquid restaking protocols, the demand for LRTs continues to grow.

What is Liquid Restaking?

Liquid restaking tokens (LRTs) build on the foundation of liquid staking tokens (LSTs). In traditional liquid staking, stakers who want to maintain liquidity while participating in network security receive derivative tokens — such as 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.

LRTs vs. LSTs: Understanding the Difference

Liquid restaking tokens (LRTs) introduce a different layer, further pushing the assets’ utility. In liquid restaking, users who already staked ETH to secure Ethereum could also stake the derivative tokens that they received to participate in securing an application-specific blockchain or a layer-2 network.

While these asset types offer flexibility, they come with their own risks. This includes the depegging or price volatility of derivative tokens, potentially affecting their value. This is further amplified in LRTs due to their exposure to multiple networks. Furthermore, a failure in one network could negatively impact restaked assets and lead to compounded losses.

Ether.fi Dominates the Market

Ether.fi retains over 50% market share for LRTs. According to DefiLlama, the protocol has $9.17 billion in restaked assets. A Node Capital report attributed the protocol’s success to its user-friendly restaking model.

"’This dominance is indicative of the platform’s successful simplification of complex restaking operations into a user-friendly token model that facilitates value accrual autonomously,’" the report said.

The Benefits and Risks of Liquid Restaking

Liquid restaking protocols offer several benefits, including:

Increased capital efficiency: Users can participate in Ethereum’s security while maintaining liquidity.
Simplified staking operations: Protocols like Ether.fi have made it easier for users to stake their assets.
Autonomous value accrual: Restaked assets can earn interest and rewards without requiring manual intervention.

However, liquid restaking also comes with its own set of risks, including:

Depegging or price volatility: Derivative tokens may lose value or become unstable.
Exposure to multiple networks: LRTs are exposed to the risk of failure in one network affecting the value of restaked assets.

Conclusion

Ethereum liquid restaking protocols have seen a significant increase in TVL in 2024, driven by the growing demand for staked asset utility. As more users participate in these protocols, it is essential to understand both the benefits and risks associated with liquid restaking. By doing so, users can make informed decisions about their staked assets and maximize their returns.