Restaking Overtakes Liquid Staking In Monthly Inflows

Restaking protocols are eating liquid staking’s lunch the past month, as per data from a Dune Analytics dashboard.

EtherFi shows the highest monthly inflows in the Ethereum staking sector, with deposits of 382,816 ETH, or $1.2 billion, followed from afar by another restaking protocol Renzo, with 135,008 ETH or $429 million. Lido, the largest liquid staking protocol, had 442,144 ETH of outflows, or roughly $1.4 billion.

Restaking refers to users taking tokens that represent ETH that have been staked in the Ethereum mainnet, and using those tokens to secure the networks of applications built on top of restaking protocol EigenLayer, in search of extra yield.

Meanwhile, liquid staking protocols have taken a hit.

Except for the two other projects that have monthly inflows (Blockdaemon with 52,532 ETH or $167 million, and Everstake with 40,800 or $129 million), most have seen outflows from traders.

The biggest loser of the month is Lido Finance, notably the top staking protocol. Funds are also leaving staking services offered via centralized exchanges, as staking on Binance, Coinbase and OKX also had outflows.

The drop will reduce Lido’s outsized footprint in the staking ecosystem, which spurred concerns that staked ETH was becoming too centralized.

Staking Is Losing Out To Restaking

Significant differences in monthly inflows between Lido and EtherFi signal that traders are increasingly looking to put their staked Ether to work, and that the hype of restaking hasn’t lost steam.

It remains to be seen whether recent mishaps in the restaking sector will shake that trend.

The second-largest restaking protocol according to total value locked, Renzo Protocol, experienced a de-peg of its restaked ETH token ezETH, in the early hours of April 24. ezETH dropped to as low as $700, before quickly rebounding to $3,200.

It has struggled to maintain its peg with Ether, however, with ETH trading for $3,180 while ezETH changes hands for $3,062.

According to pseudonymous crypto investor Tommy, the Sell-off was “likely caused by the conclusion of Season 1 Airdrop, users want to get back ETH to farm other LRT/protocols.”

If that reasoning is correct, it will also show that traders will quickly migrate to where they can get the highest returns, causing potential volatility in liquid staking and restaking tokens. .

Liquid Staking Plummets in TVL

Liquid staking protocols have suffered a substantial drop in TVL since their March peak, when traders had deposited $63 billion in the sector on March 12, read data from DefiLlama.

Since then, protocols like Lido, RocketPool, and Mantle have lost 23% of TVL, now showcasing $48 billion.

Meanwhile, the entire liquid restaking sector now holds $10.3 billion in TVL according to DefiLlama, a 30% increase since the liquid staking peak.

EigenLayer, the backbone of liquid restaking protocols like Renzo and EtherFi, has topped $15 billion in TVL, an all-time high for the project.