The total value locked (TVL) across the decentralized finance (DeFi) ecosystem is approaching highs not seen since 2021, according to data from DefiLlama.
TVL Spike Driven by Adoption of Liquid Restaking Tokens and Bitcoin L2 Networks
The TVL spike has been driven by the adoption of liquid restaking tokens (LRTs) and the growth of Bitcoin-native layer 2 networks (L2s), the data shows. Rising cryptocurrency prices due to 2024’s bull market also drove TVL higher.
TVL Growth: A Near 150% Increase Year-to-Date
As of Dec. 9, aggregate DeFi TVL stands at upward of $134 billion, marking a nearly 150% increase year-to-date according to DefiLlama. It still lags 2021’s highs of $170 billion, the data shows.
Restaking and the Future of Crypto: Insights from Kairos Research
"We’re still in the early innings for not only restaking, but crypto at large," said Kairos Research in a Dec. 9 report shared with Cointelegraph. "In the future, institutions will have a plethora of risk-adjusted strategies to get the most out of staking their [Ether]."
Restaking involves taking a token that has already been staked – posted as collateral with a validator in exchange for rewards – and using it to secure other protocols simultaneously.
Total Value Locked: A Breakdown by LRT Protocols
Liquid restaking tokens have given rise to an ecosystem of LRT protocols, such as Ether.Fi, which mints tradeable tokens representing claims on restaked assets. As of Dec. 9, Ether.Fi holds more than $9 billion in TVL.
Other notable LRT protocols include Renzo and Kelp. "Overall [Ether] TVL for the top 5 LRTs currently sits at around 3.38m ETH, worth around $12.5bn," Kairos Research said.
Total LRT TVL: A Growing Market
Total LRT TVL, including for other types of restaking tokens, stands at more than $16 billion, according to DefiLlama. This growth is a testament to the increasing adoption of liquid staking and restaking protocols in the DeFi ecosystem.
Lido’s Dominance: A Single Source of TVL
Lido, an Ether ETH liquid staking token (LST) protocol, has been DeFi’s single biggest TVL source, with nearly $40 billion staked. Roughly 10% of Lido’s stETH LST has been restaked on EigenLayer, according to data from EigenLayer’s website.
Bitcoin L2s: A Growing Market
Meanwhile, Bitcoin BTC liquid staking tokens (LSTs) command upward of $2.5 billion in TVL and are growing quickly, according to Staking Rewards. Bitcoin LSTs are tokenized claims on Bitcoin staked to L2s, including CoreChain and Babylon.
CoreChain started issuing staking rewards this year, and Babylon will start soon. At around $1.15 billion in TVL, Lombard is the most popular among Bitcoin LSTs. It is followed by Solv, with a TVL of approximately $1 billion.
Conclusion: The Future of DeFi
The growing adoption of liquid staking and restaking protocols has led to an increase in TVL across the DeFi ecosystem. As the market continues to grow, it’s essential for investors and users to stay informed about the latest developments and trends in DeFi.
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