According to Cointelegraph: The Total Value Locked (TVL) in EigenLayer, an Ethereum-based liquid restaking protocol, has seen a remarkable surge by $1 billion within just eight hours. This increase was triggered by the protocol's temporary removal of its staking cap, a decision announced on February 5, 2024.
EigenLayer previously had a 200,000 Ether per protocol staking cap. The removal was implemented as a short-term measure from February 5 to February 9, 2024, intending to encourage organic demand within the network. The move also signifies progress towards a future with no permanent staking caps.
Following this announcement, EigenLayer's TVL rocketed from $2.5 billion to $3.58 billion. This significant upturn illustrates the massive inflow of investors repurposing their liquid staked ETH tokens towards the protocol according to DeFiLlama data.
EigenLayer provides a platform where investors can earn additional yields on their staked ETH tokens by restaking them to secure other networks. As of now, the protocol supports liquid staking tokens such as Lido DAO's staked ETH (stETH) and Swell Staked Ether (swETH). Currently, Lido Staked ETH has gained the most traction for restaking on EigenLayer, with more than $1.2 billion of the total TVL, followed by Swell Staked ETH, contributing $392 million to the TVL.
However, the platform's mechanics have sparked concerns among market commentators and developers, who liken high volumes of restaking to leverage. In 2023, Ethereum's co-founder, Vitalik Buterin, cautioned that a significant boost in restaking could potentially pose "systemic risks" to the Ethereum ecosystem.
Despite these concerns, the protocol has seen exceptional growth since its mainnet launch on June 14, 2023. With a staggering 21,623% expansion in TVL, this growth reflects a strong market enthusiasm for restaking.
