Ethereum Resuscitation Narrative Grows As EigenLayer TVL Surges
The total value locked on Ethereum's recirculation protocol EigenLayer rose by 70% last week. It also currently tops $3.4 billion, according to DeFillama.
The reason for the increase is the re-opening of deposits on the re-masyang platform and the removal of stock restrictions or holds.
In the year
🟦 EigenLayer Reloaded! 🟦
From now until February 9th, 12 PM PT, re-enter the world of LST Reboot! All pools are fully uncapped, welcoming both existing pools and new partners @fraxfinance, @liquid_col and @0xMantle. pic.twitter.com/yDGHiJjX3m
— EigenLayer (@eigenlayer) February 5, 2024
Reset Ethereum
The EigenLayer team said: “The stand-off will feature the temporary removal of TVL caps, paving the way for a future where the stand-off and caps will be permanently lifted.”
“This puts the EigenLayer protocol at a critical juncture in its quest to balance long-term neutrality and decentralization.”
Basically, reloading allows users to hold the same ETH on both Ethereum and other protocols. By using Ethereum proofs and reserved tokens, smaller and newer blockchains can benefit from the stronger security and trust system, reducing the risks of attacks or failures.
However, the EigenLayer protocol faces a trade-off between neutrality, allowing free market behavior, and decentralization – preventing dominance by a single token.
The protocol has temporarily removed token mining to become more neutral. However, a fully independent protocol risks a signal controlling administration and incentives.
On February 5, EigenLayer proposed three rules to balance neutrality and decentralization. These were no capital on share price, no capital on payments from applications to stakeholders, and 33% of EigenLayer protocol incentives and management for any token or participant.
“This proposal is designed to explore the delicate balance between neutrality and decentralization. However, the final decision to discuss, improve, and implement these proposals rests with the EigenLayer protocol community.”
He added that the capital increase marks a major event, “the first instance of removing TVL caps for a limited period of time for each token.”
Low initial returns
DeFi researcher Tor Hartvigsen has offered his opinion that EigenLayer has now opened deposits in support of mETH, sfrxETH and lsETH.
He noted that the returns were not that great, but there were other downsides. EigenLayer said that parking for ETH is still attractive despite low initial revenue due to high revenue growth and airdrops.
So @eigenlayer is open for deposits again. Now also in mETH, sfrxETH and lETH. But is it worth saving?
It has been confirmed by the Discord channel that every re-booked $ETH earns 1 point per hour (so 24 points in ETH per day.)
On @WhalesMarket, EigenLayer points… pic.twitter.com/Z63vAG0S6x
— Thor⚡️Hartvigsen (@ThorHartvigsen) February 5, 2024
In conclusion, Ethereum's reboot is set to be one of the biggest crypto narratives of 2024.
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