30s Summary

In 2024, Ethereum’s total value locked (TVL) shot up by 6,000%, largely driven by the introduction of liquid restaking tokens (LRTs). Liquid restaking simplifies the staking process and allows users to maintain access to their assets while also using them in network security. LRTs also enable users to stake derivative tokens to secure various blockchain applications. However, they also come with significant risks, including exposure to price volatility and risk of network failure. As of December 2024, Ether.fi dominates 50% of the market, with a reported $9.17 billion in restaked assets.

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In 2024, the total value locked (TVL) in Ethereum liquid restaking protocols surged a whopping 6,000% as more people sought to leverage their staked assets. What you need to know is that liquid restaking allows you to get more utility from your assets, simplifying the whole staking process.

Data from DeFiLlama, a DeFi (or decentralized finance) aggregator, shows that the TVL in Ethereum’s liquid restaking was about $284 million at the start of the year. But by December 15, the figure had flourished to reach an impressive $17.26 billion.

What’s boosted this liquid restaking trend is the introduction of liquid restaking tokens (LRTs). These LRTs make it less complex for you to stake your Ether (ETH) and get more out of your investment in DeFi.

Here’s how it works: In liquid staking, if you want to maintain access to your resources while being involved in network security, you’ll get derivative tokens that represent the value of what you’ve staked. Then, you can use these tokens for other DeFi activities like trading or lending, which means you still have liquidity.

With LRTs, there’s an added benefit. If you’ve already staked ETH to secure Ethereum, you could also stake the derivative tokens you got to help secure a specific blockchain application or layer-2 network.

However, LRTs do come with some risks. The value of derivative tokens can be affected by depegging or price volatility. This risk grows with LRTs because they’re exposed to several networks. And, if one network fails, it could lead to more considerable losses.

Ether.fi is the top dog in the LRT market, holding over 50% of the market’s TVL. According to DeFiLlama, this platform has about $9.17 billion of restaked assets. Industry experts credit Ether.fi’s popularity to its super straightforward restaking model, making it easy for everyone to benefit.