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EigenLayer Surpasses Aave with $10.4 Billion in Total Value Locked

EigenLayer's rapid ascent in the DeFi space

EigenLayer has overtaken Aave, amassing a total value locked (TVL) of $10.4 billion. This surge followed EigenLayer's strategic decision to lift the cap on staking amounts, leading to a substantial influx of crypto assets. Notably, on March 5, EigenLayer's TVL peaked at $11 billion, exceeding Aave's 21-month high of $10.7 billion, positioning EigenLayer as the second-largest DeFi protocol, trailing only behind the staking behemoth Lido. 

This data, courtesy of DefiLlama, highlights EigenLayer's remarkable 382.5% growth in TVL since February 5, showcasing the protocol's growing influence and dominance in the DeFi landscape.

The controversy surrounding restaking protocols

The ascent of restaking protocols like EigenLayer and the Octopus Network has ignited a debate within the Ethereum community. These platforms enable users to reinvest staking-derived tokens, such as Lido's Staked ETH (stETH), a move that has sparked controversy. 

Critics, including some Ethereum developers, warn that such practices introduce excessive leverage into the system. Conversely, supporters argue it offers additional rewards for those who have already staked their ETH. Highlighting this contention, Austin Federa of the Solana Foundation questioned the valuation of staking-derived assets in a March 5 X post. 

Federa argued, challenging the conventional metrics used to assess TVL in the DeFi space:


"I don’t think restaking (or liquid staking) should be counted as TVL if we’re not going to count staked native assets as TVL," 

The impact on the DeFi ecosystem

EigenLayer's meteoric rise has significantly influenced the DeFi ecosystem, boasting over 115,000 unique depositors, with Dune Analytics and DefiLlama revealing that 74% of the staked tokens are Wrapped Ether (wETH) and stETH. This contrasts with Aave, which maintains over 5,700 daily active users, and Lido, with fewer than 430, as per Token Terminal data. 

The shake-up extends beyond user statistics; Aave faced operational challenges after its long-standing risk manager, Gauntlet, departed on February 21 due to 

"inconsistent guidelines and unwritten objectives of the largest stakeholders." 

This event occurred shortly after Aave's engagement with Gauntlet in a $1.6 million annual contract and its subsequent partnership with Morpho. The landscape of liquid staking protocols, led by Lido with a dominant $35 billion in TVL, underscores the burgeoning sector of restaking, now the sixth-largest DeFi category, indicating a transformative period in decentralized finance.