When compared to the previous quarter, the total value locked (TVL) in decentralised finance (DeFi) approximately doubled during the first quarter of 2024, indicating that DeFi has witnessed tremendous growth from the previous quarter. It is possible to ascribe, at least in part, this spike to Ethereum’s liquid restaking activities, which have been the driving force behind the expansion of DeFi TVL prices. Protocols such as Lido and EigenLayer have been essential in this growth, since they have contributed to the widespread adoption of liquid staking and restaking.
Recent study indicates that DeFi TVL experienced a significant increase from a low of $36 billion in the fourth quarter of 2023 to a high of approximately $97 billion in the first quarter of 2024. This is an increase of 81% and marks a high point for DeFi TVL that has been reached in the last two years. There was a modest rise in the TVL data that Messari gave, and he said that the amount of DeFi collateral climbed by 65.6% from the previous quarter to reach $101 billion. A number of factors, including the rise in the values of underlying assets and the implementation of liquid restaking, have contributed to the expansion of TVL.
Both asset price appreciation and liquid restaking were the primary factors that contributed to the increase of Ethereum’s total value of assets (TVL), which was roughly 71% higher than before. Lido and EigenLayer are two examples of protocols that have played a significant role in the revival of DeFi TVL since its inception. On March 13, liquid staking TVL achieved an all-time high of $63 billion. This result was mostly driven by the Ethereum liquid staking protocol Lido, which now controls a market share of 62% of the liquid staking ecosystem. In addition, during the first three months of 2024, the liquidity restaking protocol known as EigenLayer seen a significant increase in both its popularity and its utilisation. The total value of EigenLayer’s TVL reached $12 billion at the conclusion of the quarter, representing a stunning 990% rise. EigenLayer makes it possible to stake Ethereum several times, which results in increased returns.
In addition to liquid restaking activities, user activity also played a big influence in the expansion of DeFi TVL. This growth was not just contributed by liquid restaking initiatives. In the most recent quarter, QuickNode recorded a significant increase in user activity of 29.1% compared to the previous quarter, which has spurred expectations of a second “DeFi Summer”. Despite the attempts of the SEC to regulate the decentralised finance area, there are indications that expansion and a paradigm change are on the horizon.
However, the current retreat in the cryptocurrency market has resulted in a decrease in the value of DeFi TVL that has been seen. As this article is being written, the value of DeFi TVL has dropped by 11%, reaching $86.6 billion. The entire value of assets that are locked in DeFi protocols has been negatively impacted as a consequence of the larger market slump, which has cause this reduction.
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