Ethereum rose close to $4000 as EigenLayer became the second largest DeFi protocol.

adminMarch 8, 2024

Ethereum, the second-largest digital asset by market capitalization, is trading near the pivotal $4,000 level for the first time since December 2021, up 15% over the past week.

Amid this price rise, EigenLayer, the leading restaking protocol, is now the second-largest DeFi protocol in terms of total value locked, according to DeFillama data.

price of ETH

Ethereum price is currently trading at $3954 after rising 4% over the past day. CryptoSlate’s data.

This upward movement in the value of Ethereum can be linked to the excitement surrounding the upcoming Dencun upgrade, which is scheduled to be released on mainnet by March 13th. Dencun introduces Proto-danksharding to Ethereum, a strategic move aimed at lowering transaction costs on layer 2 blockchains. Therefore, the issue of scalability must be addressed head-on.

Moreover, the market is anticipating the possible approval of a spot ETH ETF by the US SEC. This approval, if realized, could act as a significant catalyst to further fuel the ongoing price surge.

EigenLayer’s soaring TVL

EigenLayer’s TVL soared to an all-time high of $11.7 billion during the week, surpassing Aave’s TVL of $11.4 billion.

Notably, on March 5, the protocol witnessed a massive positive change of $790 million in TVL, marking the highest single-day change since February 9, according to blockchain analytics firm IntoTheBlock.

own layer — EigenLayer TVL variant (Source: IntoTheBlock)

The growth trajectory of EigenLayer’s TVL has been remarkable, especially over the past 30 days. It has surged five-fold from about $2 billion at the beginning of the previous month to the current figure. Surprisingly, total assets locked in the protocol jumped from less than 1 million ETH in early February to over 3 million ETH.

stratum propria — The total value of EigenLayer is locked. (Source: DeFillama)

This surge in TVL is closely related to EigenLayer’s decision last month to lift token restocking restrictions and remove TVL limits for individual tokens. Community members expect these changes to become permanent later this year.

Meanwhile, EigenLayer’s unique recapture model has attracted significant investments, most notably a $50 million Series A funding round led by Blockchain Capital in March 2023 and a $100 million investment from Andreessen Horowitz in February 2024.

However, EigenLayer’s rapid growth has led to increased security scrutiny, leading the project to offer rewards of up to $100,000 to researchers who discover medium or higher severity security issues with the platform.