Ethereum Restaking App Approaches $4 Billion In Deposits: Biggest Airdrop In History Incoming?

EigenLayer is a new liquid restaking platform for Ethereum. The protocol allows users to stake the same amount of Ether (ETH) across multiple projects simultaneously to earn additional rewards. Proponents of the technology say that it will increase capital efficiency and spur innovation. Those against the technology believe that it could cause overleveraging and is susceptible to slashing. 

Though the new technology is causing a debate among ETH enthusiasts, it is impossible to deny the project’s popularity. Initially, EigenLayer put a 200,000 ETH cap on each protocol so that it could test the concept without extreme amounts of volume. The limit was removed on Feb. 5. Within 24 hours, over 700,000 ETH, or over $1.6 billion was deposited into EigenLayer. According to data from DefiLlama, this brought EigenLayer's total volume locked (TVL) to nearly $4 billion, which is over 1% of all Ethereum in circulation. For comparison, EigenLayer had less than $300 million in TVL for most of December 2023. 

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While the limit on deposits has been temporarily removed, a new limit will be put in place on February 9th. While the exact limit is unknown, it will likely be close to the TVL on February 9th. However, the project has also stated that it hopes to eventually remove any deposit limits, though this will likely happen some time in the future, if it happens at all. 

On February 5th, ETH appreciated more than 3.5%, causing its market cap to approach $300 billion. Despite the strong day, ETH was still down more than 1% over the previous 7 days.

To make the project even more enticing, EigenLayer has begun showing EigenLayer Points, which are a calculation consisting of the time spent restaking, volume restaked, etc. to formulate a numerical value. While there is no guarantee that this could lead to an airdrop, other staking platforms have used a similar system in the past to mete out tokens in the event of an airdrop. One example from recent memory was the Jito (JITO) airdrop on the Solana chain. This project also used a point system, which allowed users to be placed into tiers that gave different amounts of JITO on the day of the airdrop. Again, there is no guarantee that EigenLayer will use the points system for an airdrop, but it has been used in the past. 

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EigenLayer and restaking is certainly an interesting system, especially considering the potential for spot Ethereum ETFs and Ethereum chain upgrades potentially coming soon. As the protocol continues to grow and we start to see its use cases, we will gain a better understanding of where liquid restaking could potentially play a role in the future of blockchain.