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- EigenLayer saw a staggering 7x jump in TVL since the beginning of 2024.
- Ethereum’s entry validator queue saw a 4x spike in the last 10 days.
EigenLayer smashed its competitors and became the fourth-largest decentralized finance (DeFi) protocol, as the Ethereum [ETH] restaking narrative gains traction by the day.
According to AMBCrypto’s scrutiny of DeFiLlama’s data, EigenLayer boasted deposits worth $7.23 billion at press time.
This was bolstered by a threefold increase in the last two weeks and a staggering 7x jump since the beginning of 2024.
Just to add a bit more context to the astronomical rise, EigenLayer wasn’t even in the top 10 list of DeFi projects a month ago.
Source: DeFiLlama
EigenLayer bolsters staking demand
One of the hottest new DeFi narratives, restaking involves repurposing staked ETH to extend security to other applications, thus allowing stakers to earn extra rewards on their investments.
It was likely that this lure of higher interest was drawing users towards EigenLayer.
But the prerequisite — ETH must be first staked on the Ethereum deposit contract. Hence, a growing demand for EigenLayer would mean a greater number of ETH getting locked up.
According to AMBCrypto’s analysis of Staking Rewards’ data, more than 25% of all ETH in circulation have gone into staking.
Interestingly, the staked ETH graph has risen steeply in February, mirroring EigenLayer’s ascent.
Source: Staking Rewards
Moreover, the number of ETH validators looking to enter the network has seen a 4x spike in the last 10 days, data from validatorqueue.com showed.
These findings added weight to the theory of EigenLayer being the primary catalyst behind the growing interest in staking.
ETH liquid supply plummets
As interest in staking surged, the amount of ETH available for active trading started to dip.
As per AMBCrypto’s examination of Santiment’s data, the number of unique ETH deposit addresses fell significantly over the past 1o days or so.
The shrinking liquid supply, although putting off active traders, may have a favorable impact on ETH’s long-term price stability.
Source: Santiment
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The shrinking liquid supply, although putting off active traders, may have a favorable impact on ETH’s long-term price stability.
At the time of writing, the second-largest ETH was exchanging hands at $2,797, up 23% since the start of the month.