According to CoinDesk, liquid restaking protocol Puffer has reached over $1 billion in deposits, less than three weeks after its launch on February 1. The project is part of the growing restaking trend that has revitalized decentralized finance (DeFi) on Ethereum. Puffer and similar liquid staking protocols, such as Ether.Fi, take deposits from investors and channel them into EigenLayer, a restaking protocol that enables ether (ETH) stakers to earn interest by redeploying their assets to secure third-party networks in addition to Ethereum, known as 'actively validated services' (AVSs).
These liquid staking platforms, with their liquid restaking tokens (LRTs), are vying to replace Lido's staked ETH (stETH) as the preferred asset for DeFi traders. Puffer issues an LRT called pufETH to users, representing their underlying deposit and allowing them to profit from restaking while still receiving a token they can trade or reuse elsewhere. PufETH will earn interest once EigenLayer's AVSs are operational, and users can reinvest the token with DeFi protocols to earn higher rewards.
Puffer and other liquid staking platforms have attracted investors by offering easier access to EigenLayer restaking and generous incentives known as 'points,' which are scores that the platforms track internally to measure user engagement. Investors hope that these points may eventually be redeemable for future token airdrops, but the lack of clarity on this makes them highly speculative. Puffer claims its technology is 'slash-resistant,' designed to reduce one of the biggest risks with restaking: heightened risk of having deposits 'slashed,' or penalized for breaking a network's rules, compared to normal ETH staking. Puffer Finance CEO Amir Forouzani stated that restaking comes with its own risks and emphasized the importance of vetting AVSs to only allow those without exogenous risks. Puffer is the second-largest liquid staking platform after Ether.Fi, which crossed $1 billion in deposits earlier this month. EigenLayer has accumulated $7.7 billion in deposits since its launch in June, largely due to the investment incentives offered by liquid restaking providers.