EigenLayer TVL crosses $11 billion, overtakes AAVE

EigenLayer, a restaking protocol, is now the second-largest protocol by total value locked (TVL), surpassing even the well-known decentralized finance protocol Aave.

EigenLayer had decided to remove the network’s deposit caps for a limited time. 

Based on data available on DeFiLlama, the TVL for EigenLayer crossed $11 billion at the time of writing, while the TVL for Aave was at $10.37 billion. 

Restaking has become a popular and eye-catching narrative in the world of cryptocurrency. In addition to bolstering the security of PoS chains and decentralized apps (dApps), this disruptive technique allows users to stake an asset in one location and then stake it again somewhere else. 

Restaking also opens up new opportunities for participants to earn extra incentives. Restaking was introduced on Ethereum by Eigen Layer. 

Reusing ETH to secure numerous services lowers the capital requirements for participation and greatly boosts the confidence assurances to specific services.

While validators are free to recycle their ETH into more modules and increase their payout, each module’s unique conditions are enforced to preserve crypto-economic security. This guarantees that validators verify transactions truthfully or else they run the danger of losing their Ethereum. 

The Eigenlayer smart contracts enforce the slashing, however, modules can customize their slashing conditions to suit the unique requirements of their networks.

In general, a network gets more secure the more coins are locked/staked in it. Eigenlayer makes the significant sums of ETH committed on the main layer easier for modules to access by lowering the opportunity cost of restaking. 

To initiate a 51% attack (in which an individual or group takes control of more than 50% of the network) on a module, a potential attacker has to possess a far greater quantity of ETH. There was a reason why EigenLayer had imposed caps on deposit limits and it remains to be seen if the network can remain secure and sufficiently decentralized in the absence of such limits. 

To secure their system, developers of new decentralized services for Ethereum have to establish a new trust network from scratch, which fragments security. By enabling any service, regardless of its makeup (such as EVM compatibility), to access Ethereum’s staker pooled security, EigenLayer resolves this issue and fosters permissionless innovation and free-market governance.

Eigenlayer’s ascent and current surge in popularity portends a change in the direction of network security for protocols built on Ethereum. Several projects may choose to connect with Eigenlayer to take advantage of the established trust of the Ethereum network through restaking, as opposed to arduously building network trust from scratch. 

However, there are still a lot of issues to be resolved, such as minimizing centralization and making sure protocols can continue to add value to their native coins.

Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.