thereum's DeFi space witnessed an explosion in 2024 catalyzed by liquid restaking protocols that saw the meteoric rise of TVL. From $284 million at the beginning of the year, it is as high as $17.03 billion on December 15– a growth of 5,884% thus far. Such growth reflects the appetite for better staking opportunities as users look toward maximizing the value of their staked ETH.
Liquid restaking has been a game-changer as staking goes beyond its initial use case in Ethereum's proof-of-stake consensus model. Liquid staking derivatives account for more than 50% of all 28.7 million ETH currently staked on the network, according to blockchain analytics firm Dune.
What is Liquid Restaking?
Liquid restaking is an extension of the basic concepts of liquid staking; a user stakes his ETH in Ethereum to secure the network and, as a result, receives a derivative token, for example, stETH or rETH. These can then be held across a suite of DeFi apps with no loss of liquidity, representative of staked ETH.
Restaking goes one step further from that mechanic, where many kinds of derivative tokens are used for staking to secure the network, other than its main network, which will generally include layer-2 scaling solutions or application-specific blockchains. This layering within a layer of staking builds an ultra multi-layer staking process and increases radically the utility of staked assets.
Reasons for Growth
The rapid expansion of liquid restaking in 2024 is tied to several key data points:
Participation in staking on Ethereum has reached an all-time high, with more than 34 million ETH worth $52 billion being staked; 15 million of those are already in liquid staking derivatives today.
Liquid restaking, by contrast, has much greater potential yields. Holders see an average annual 3.7% on normal ETH staking rewards while restaking LSDs could yield returns from 7% up to as high as 12%, depending on the protocol and participation within the network.
Liquid staking and restaking went mainstream in 2024, with platforms like Lido, Rocket Pool, and Ether. It has also integrated its products into tier-one platforms like Aave and Curve, thus enabling LSD collateral utilities to significantly boost liquidity and TVL growth in the ecosystem.
The Role of Ether.fi
One of the major reasons for the rise in liquid restaking has been the dominance of Ether. fi in the market. Its unique, non-custodial staking model attracted institutional investors and made up $9 billion of TVL—53% market share. In this way, users can deploy LSDs across discontinuous networks through efficient restaking mechanisms.
While competitors like Lido and Rocket Pool have leveraged Ether to add to their product offerings, the latter features a better user experience alongside diverse staking mechanics, which gives it the high ground in competing with both retail and institutional participants.
Liquid restaking is a game-changing innovation across both the Ethereum PoS and DeFi ecosystem, bringing in a whopping $17 billion in TVL in 2024 alone. Restaking unlocks ETH to secure multiple networks while earning myriad compounded rewards, in turn redefining the use of staking within DeFi.
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