Ethereum Liquidity Restocking TVL Increases From $284M To $17B By 2024
Ethereum Liquidity Recovery Protocols have increased their Total Value Locked (TVL) by almost 6,000% in 2024, as demand for equity-backed assets increased this year.
As of January 1, Defillama, a decentralized finance (deFi) data aggregator, showed that Ethereum's liquidity restocking TVL was around $284 million. About a year later, the amount had risen nearly sixtyfold, reaching $17.26 billion on December 15.
Retaining the liquidity of the total value locked in Ethereum. Source: Defillama
The increase in liquidity recovery can be attributed to the use of Liquidity Reset Tokens (LRTs). These assets simplify the complexities of traditional Ether (ETH) storage and increase capital efficiency in DeFi.
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What is fluid recovery?
Liquid Tokens (LRTs) build on top of Liquid Staking Tokens (LSTs). In a liquid pool, stakeholders who want to maintain liquidity while participating in network security receive alternative tokens, such as stETH from Lido, that represent their stake holdings.
These tokens can be used in other DeFi activities such as trading, lending, or agricultural production, allowing holders to maintain the liquidity of their holdings.
Liquid Tokens with Liquid Redefine Tokens. Source: Cointelegraph
Meanwhile, LRTs introduce a different layer, pushing the property's utility even further. In liquid re-pooling, users who have already staked to secure an ATM can also participate in the initial tokens received to secure the application-specific blockchain or layer-2 network.
Although these types of assets offer flexibility, they come with their own risks. This includes the issuance or price volatility of the Derivative Tokens, which may affect their value. This is further compounded in LRTs due to their exposure to multiple networks.
In addition, a failure in a single network can adversely affect real estate assets and result in complex losses.
Ether.fi has more than 50% market share for LRTs
Liquidity Recovery Protocol Ether.fi controls over 50% of LRT market TVL. According to Defilama, the protocol has $9.17 billion in repurchased assets.
The Cross Capital report describes a user-friendly reboot model for the success of the protocol. “This dominance is indicative of the platform's ability to simplify complex recovery operations into a user-friendly token model that facilitates autonomous value,” the report said.
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