According to Bloomberg, speculators have invested nearly $2 billion in decentralized finance (DeFi) projects focused on Ethereum restaking. DeFi has been a significant aspect of the crypto market since developers aimed to create a marketplace without banks or intermediaries by automating processes on various blockchains. Despite the sector's struggles in recent years due to high rates of hacks and dubious projects, interest in Ethereum restaking projects has surged.
Restaking allows Ether holders to earn higher returns than the fixed rate offered by staking on the Ethereum network. New platforms, such as KelpDAO, ether.fi, and Renzo, have emerged as major drivers of growth for EigenLayer, a startup focused on restaking. These platforms provide a derivative version of restaked Ether tokens, which can be used in other DeFi applications to earn rewards or borrow against the derivatives token to increase staking rewards. So far, these projects have attracted over $800 million in deposits.
Speculative traders are also flocking to platforms like Pendle Finance, which enables leveraged bets on potential rewards from restaking. While the actual restaking rewards are uncertain, Pendle offers more than 30% returns on deposited liquid restaking Ether tokens. However, as money pours into the sector based on a project that is not yet live, analysts have expressed concerns that DeFi speculators are returning to the practice of chasing high returns before they are paid out. EigenLayer's next stage of its official launch is scheduled for the first half of this year.
