The overall worth locked (TVL) of restaking protocol EigenLayer has surpassed that of well-liked decentralized finance protocol Aave, making it the second largest protocol through TVL.
This comes after EigenLayer’s determination to quickly take away deposit caps on its community.
On the time of writing, the TVL for EigenLayer sits at $11.24 billion, whereas the TVL for Aave is at $10.7 billion, in line with info accessible on DeFiLlama.
The TVL “flip” has drawn in commentators who elevate the query about whether or not or not staking, or liquid staking, ought to be included in a protocol’s TVL if staked native property are usually not included within the depend.
On a DeFi protocol like Aave, TVL incorporates the full quantity of tokens deposited into a sensible contract and used as collateral to borrow and earn yield. On this case, borrowed cash usually are not included within the TVL to stop inflating the TVL.
Nevertheless, on EigenLayer, customers can take part in securing the community and earn further rewards by depositing already native staked ETH or liquid staked ETH into the community’s good contracts and subjecting them to slashing situations.
Carlos Mercado, an information scientist at Flipside, informed Blockworks that TVL is designed to be an financial strategy to measure participation. He notes that you will need to differentiate between native property akin to ETH from artificial variations of the identical asset, like wrapped ETH or staked ETH.
“When you don’t modify for this, you get into a difficulty of inflating the chain’s TVL, because the identical token will be counted a number of occasions over,” Mercado stated.
This logic can be utilized to protocol-specific TVLs, he stated. Including that EigenLayer itself is a restaking, that means that depositing stETH or cbETH might be thought-about triple counting TVL.
Blockworks analysis analyst Ren Yu Kong notes that TVL has traditionally been used as a metric to measure the full quantity of property in a sensible contract.
“One might depend staking contracts with withdrawal credentials pointed in direction of EigenLayer’s contracts as a model of good contracts, and thus EigenLayer TVL would depend as TVL within the widespread sense,” Kong stated.