Ethereum Repurchase Narrative Grows as EigenLayer TVL Increases

[Coinx]

Ethereum Repurchase Narrative Grows as EigenLayer TVL Increases


The total value locked on Ethereum repurchase protocol EigenLayer increased by 70% last week. Moreover, according to DeFiLlama, it is currently at an all-time high of $3.4 billion.

The increase is due to the reopening of deposits on the staking platform and the removal of staking limits or caps.

On February 6, the protocol stated, “All pools, including both existing pools, have been completely uncapped,” and welcomed new partners Frax Finance, Liquid Collective, and mantle.

EigenLayer Reload Reloaded!

From NOW until February 9th at 12pm PT, dive back into the world of LST repurchases! All pools, including both existing pools and new partners, are fully uncapped. @fraxfinance, @liquid_col& @0xMantle. pic.twitter.com/yDGHiJjX3m

— EigenLayer (@eigenlayer) February 5, 2024

Ethereum Repurchase Increases


The EigenLayer team said that “the pause marks the temporary removal of TVL limits, paving the way for a future where pauses and limits are permanently removed.”

“This puts the EigenLayer protocol at a critical juncture trying to balance neutrality and decentralization in the long term.”

Essentially, restaking allows users to stake the same ETH across both Ethereum and other protocols. By leveraging Ethereum’s validators and staked tokens, smaller and newer blockchains can reduce the risks of attack or failure by taking advantage of its robust security and trust system.

However, the EigenLayer protocol faces a choice between neutrality, which allows free market behavior, and decentralization, which prevents single token dominance.

The protocol has temporarily removed token repurchase limits to be more neutral. However, a completely neutral protocol runs the risk of a single token dominating governance and incentives.

EigenLayer proposed three rules on February 5 to balance neutrality and decentralization. These were: no cap on staked token value, no cap on payments from applications to stakers, and a 33% cap on any token or participant in EigenLayer protocol incentives and governance. .

“This proposal is designed to strike the delicate balance between neutrality and decentralization. However, the final decision to discuss, refine and implement these recommendations rests with the EigenLayer protocol community.”

He added that the limit increase marks a major event because it marks the first instance of TVL limits for each token being eliminated for a fixed period of time.

Low initial return


DeFi researcher thor Hartvigsen offered his opinion on EigenLayer reopening deposits with support for mETH, sfrxETH, and lsETH.

He noted that the returns aren’t that big, but there are other potential upsides. EigenLayer said ETH is still attractive for parking despite low initial earnings due to increased earnings and airdrop potential.

For this reason @eigenlayer once again opened for deposits. Now with mETH, sfrxETH and lsETH. But is it worth the investment?

Confirmed that everyone has staked again in the Discord channel $ETH earns 1 point per hour (i.e. 24 points per day per ETH).

Open @WhalesMarketEigenLayer points… pic.twitter.com/Z63vAG0S6x

— Thor

Hartvigsen (@ThorHartvigsen) February 5, 2024

In summary, the Ethereum repurchase is predicted to be one of the biggest crypto stories of 2024.

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