Research Summary
The report explores the concept of restaking protocols, focusing on EigenLayer, the largest restaking project with a total value locked (TVL) of over US$7B. It also discusses the emergence of liquid restaking tokens (LRTs) and the leading protocols in the liquid restaking market. The report further explores restaking beyond Ethereum, with projects like Babylon for Bitcoin and Picasso for Solana.
Key Takeaways
EigenLayer: A Leader in Restaking
- Significant Market Presence: EigenLayer, a restaking protocol, has a TVL of over US$7B, making it the largest restaking project. It offers “security-as-a-service” on Ethereum and is currently in Stage 2 of its phased launch strategy, with a full mainnet launch expected later in the year.
- Collaborative Security Infrastructure: The EigenLayer ecosystem includes restakers, node operators, and actively validated services (AVSs), creating a collaborative security infrastructure. The first AVS to use EigenLayer’s pooled security model is EigenDA, a data availability layer.
- Addressing Fragmented Blockchain Security: EigenLayer uses staked $ETH to address fragmented blockchain security. It has over 2.6M $ETH restaked, a TVL of $7.71 billion, and enables projects to leverage Ethereum’s security without issuing their own tokens.
Liquid Restaking Tokens (LRTs)
- Emergence and Growth: LRTs emerged in 2024, following the growth of liquid staking tokens (LSTs) in 2023. They allow for liquidity and additional yield in DeFi, with a market TVL exceeding US$3.5B.
- Leading Protocols: Protocols like Ether.fi, Puffer Finance, Kelp DAO, and Renzo Protocol lead the liquid restaking market, with many teams introducing innovative solutions.
Restaking Beyond Ethereum
- Bitcoin and Solana: Restaking is explored beyond Ethereum, with projects like Babylon for Bitcoin and Picasso for Solana. Babylon is a Bitcoin staking protocol aiming to use Bitcoin’s market cap to enhance the security of PoS chains and dApps. Picasso, part of the Kusama network, is transitioning to a Cosmos appchain to enhance DeFi layer interoperability across blockchain ecosystems.
Actionable Insights
- Monitor the Progress of EigenLayer: With its significant market presence and innovative approach to addressing fragmented blockchain security, EigenLayer is a key player in the restaking space. Stakeholders should keep an eye on its phased launch strategy and the development of its ecosystem.
- Explore Opportunities with LRTs: The emergence and growth of LRTs present opportunities for liquidity and additional yield in DeFi. Stakeholders should explore the leading protocols in the liquid restaking market and their innovative solutions.
- Consider Restaking Beyond Ethereum: Restaking is not exclusive to Ethereum. Stakeholders should consider the potential of projects like Babylon for Bitcoin and Picasso for Solana, which are exploring ways to leverage the security of larger chains for other PoS chains.
