The total value locked (TVL) across the decentralized finance (DeFi) ecosystem has reached new heights not seen since 2021. According to data from DefiLlama, a leading source for DeFi metrics, the current TVL stands at over $134 billion, marking a nearly 150% increase year-to-date.
Key Drivers of the TVL Spike
The growth in DeFi TVL can be attributed to two main factors: the adoption of liquid restaking tokens (LRTs) and the expansion of Bitcoin-native layer 2 networks (L2s).
Liquid Restaking Tokens
Liquid restaking tokens, also known as LRTs, have gained significant traction in recent times. These tokens enable users to participate in staking activities without locking up their assets for extended periods.
How LRTs Work
Restaking involves taking a token that has already been staked and using it to secure other protocols simultaneously. This process allows users to maximize their staking rewards while minimizing the risks associated with asset lockup.
Bitcoin Layer 2 Networks
Bitcoin-native layer 2 networks, also known as L2s, have seen significant growth in TVL. These networks enable faster transaction processing times and lower fees compared to the mainnet.
Key Players in the Bitcoin L2 Space
CoreChain and Babylon are two prominent players in the Bitcoin L2 space. Both networks offer liquid staking tokens (LSTs) that tokenize claims on Bitcoin staked to their respective platforms.
TVL Growth
As of December 9, 2023, aggregate DeFi TVL stands at over $134 billion, marking a significant increase from the same period last year.
TVL Breakdown
According to DefiLlama, the top five LRT protocols hold around 3.38 million ETH in total value locked, worth approximately $12.5 billion.
EigenLayer
EigenLayer, the largest restaking protocol, has bootstrapped over $17 billion in TVL since its launch in 2023. This growth can be attributed to the increasing adoption of LRTs and the benefits they offer to users.
Ether.Fi
Ether.Fi, another prominent LRT protocol, holds over $9 billion in TVL as of December 9.
Other Notable Protocols
Renzo and Kelp are two other notable LRT protocols that have gained significant traction in recent times.
TVL Comparison
Total LRT TVL, including other types of restaking tokens, stands at over $16 billion. This growth demonstrates the increasing popularity of LRTs among DeFi users.
Lido
Lido, an Ethereum liquid staking token (LST) protocol, has been the single biggest contributor to DeFi’s TVL, with nearly $40 billion staked. Roughly 10% of Lido’s stETH LST has been restaked on EigenLayer.
Bitcoin L2s
As mentioned earlier, Bitcoin L2s have seen significant growth in TVL. According to Staking Rewards, these networks command over $2.5 billion in TVL and are growing quickly.
Popular Bitcoin LST Protocols
CoreChain and Babylon are two prominent players in the Bitcoin L2 space. Lombard is currently the most popular among Bitcoin LSTs, holding around $1.15 billion in TVL.
Solv
Solv is another notable Bitcoin LST protocol, with a TVL of approximately $1 billion.
Conclusion
The growth in DeFi TVL can be attributed to the increasing adoption of liquid restaking tokens and the expansion of Bitcoin-native layer 2 networks. As the DeFi ecosystem continues to evolve, we can expect to see further innovation and growth in these areas.
Sources
- DefiLlama
- Staking Rewards
- Kairos Research
Related Content
- Anchorage Digital to support liquid Ether staking
- EigenLayer: The Largest Restaking Protocol in DeFi
- What are Liquid Restaking Tokens?
