When compared to the previous quarter, the total value locked (TVL) in decentralized finance (DeFi) nearly doubled in the first quarter of 2024, demonstrating substantial growth in the DeFi sector. This surge can be partly attributed to Ethereum’s liquid restaking activities, driving the expansion of DeFi TVL figures. Key protocols like Lido and EigenLayer have played pivotal roles in promoting liquid staking and restaking practices.
A recent study reveals a notable surge in DeFi TVL, rising from a low of \(36 billion in Q4 of 2023 to a peak of around \)97 billion in Q1 of 2024, marking an 81% increase and reaching a two-year high. According to data from Messari, the DeFi collateral amount surged by 65.6% from the previous quarter, totaling $101 billion. Factors such as asset valuation upticks and the adoption of liquid restaking mechanisms have fueled this TVL growth.
The escalation of Ethereum’s total asset value (TVL) by approximately 71% can be chiefly attributed to asset appreciation and liquid restaking practices. Protocols like Lido and EigenLayer have significantly contributed to the resurgence of DeFi TVL. On March 13, the TVL for liquid staking hit a record high of \(63 billion, largely propelled by the Ethereum liquid staking platform Lido, capturing a 62% market share. EigenLayer, a liquidity restaking protocol, observed a remarkable surge in popularity and utilization, with its TVL reaching \)12 billion by the end of the quarter—an impressive 990% increase. EigenLayer enables multiple Ethereum staking, leading to enhanced returns.
Apart from liquid restaking, user engagement has also been a driving force behind the DeFi TVL expansion. QuickNode reported a significant 29.1% surge in user activity in the latest quarter compared to the previous one, sparking anticipation of a potential “DeFi Summer.” Despite the SEC’s regulatory efforts in the DeFi space, signs of growth and a paradigm shift are evident on the horizon.
Nevertheless, the recent downturn in the cryptocurrency market has resulted in a decline in the DeFi TVL valuation. As of the time of writing, the DeFi TVL has decreased by 11%, amounting to $86.6 billion. The overall value of assets locked in DeFi protocols has been adversely affected by the broader market downturn, leading to this reduction.
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