- Ethereum liquid restaking drove the surge in DeFi TVL to nearly $100 billion in the first quarter of 2024.
- Protocols like Lido and EigenLayer were major contributors to the DeFi TVL growth due to increased adoption of liquid staking and liquid restaking.
- While DeFi TVL peaked at almost $97 billion, it has since declined by 11% to $86.6 billion following the recent crypto market pullback.
Decentralized finance (DeFi) total value locked (TVL) almost doubled in the first three months of this year compared to the previous quarter, partially driven by Ethereum liquid restaking initiatives according to recent research.
DeFi TVL Growth in Q1 2024
DeFi total value locked surged from a Q4 2023 low of $56 billion to peak at almost $97 billion in the first quarter of 2024, according to DefiLlama. Since the beginning of the year, it has increased by 81% to a two-year high of $98 billion last week.
Messari reported slightly higher TVL figures on April 18, noting that DeFi collateral increased by 66.5% quarter-on-quarter to reach $101 billion. However, it attributed this growth to the prices of the underlying assets increasing and liquid restaking.
Liquid Restaking Driving Growth
This uptick was primarily driven by asset price appreciation and liquid restaking, led by Ethereum’s TVL growth of nearly 71%.
Protocols such as Lido and EigenLayer have been behind the DeFi TVL resurgence. Liquid staking TVL skyrocketed to an all-time high of $63 billion on March 13, primarily driven by Ethereum liquid staking protocol Lido, which currently has a 62% market share of the liquid staking ecosystem according to DefiLlama.
Additionally, liquid restaking protocols such as EigenLayer exploded in popularity and usage during the period. EigenLayer TVL surged a whopping 990% during the first three months of 2024 to end the quarter with $12 billion. EigenLayer allows ETH to be staked more than once for additional yields.
The findings were echoed in an April 18 report by Web3 infrastructure and developer platform QuickNode and institutional crypto data platform Artemis. “Staking, liquid staking, restaking, and liquid restaking have all been catalysts of DeFi’s recent explosive growth,” it stated before adding that this explains why staking now represents a large portion of DeFi’s TVL.
User Growth Contributing
QuickNode also reported that a substantial 29.1% quarter-on-quarter rise in user activity has roused hopes of a second DeFi Summer, as there are signals for growth and a transformative shift despite the SEC’s best efforts.
Nevertheless, since the recent crypto market retreat, DeFi TVL has declined 11% to $86.6 billion at the time of writing.
Conclusion
In summary, the massive growth in DeFi TVL in Q1 2024 was primarily driven by Ethereum liquid restaking protocols like Lido and EigenLayer, as well as rising crypto asset prices. However, the growth has stalled in recent weeks due to the broader crypto market downturn.
