Puffer Finance has quickly risen to become the third-largest Liquid Restaking Token (LRT) protocol, achieving a staggering nine-figure Total Value Locked (TVL) within just one day of its launch .
The project commenced its deposit phase on February 1, initiating a quest and vampire attack that rewards users for converting Lido’s stETH token into its own liquid restaking token (LRT), known as pufETH. The debut day proved to be a resounding success, with Puffer Finance boasting a TVL of $194 million, as reported by DeFi Llama.
The LRT sector is experiencing substantial growth, expanding from less than $50 million in November to a TVL exceeding $1 billion. Restaking tokens, building on the success of Liquid Staking Tokens (LST) like stETH, offer users the ability to earn Ether staking rewards without the need to operate an Ethereum node. Additionally, LSTs allow for liquidity, enabling tokens to be used in DeFi for additional yield generation or instant sale without the typical 28-hour unstaking delay.
Puffer Finance’s LRT, pufETH, not only provides these benefits but also accrues additional rewards through native restaking on EigenLayer. EigenLayer is a protocol that allows stakers to validate third-party services, offering extra yield on top of staking rewards. Users can access EigenLayer either by depositing LSTs into capped pools or natively by depositing unlimited ETH. This native restaking feature enhances the yield for tokenholders.
The LRT sector has seen significant growth, driven by the success of EtherFi, currently holding a TVL of $608 million. Other prominent LRT protocols include Kelp DAO with a $280.5 million TVL and Renzo with a $171 million TVL. Collectively, the top four LRT protocols command $1.25 billion in assets, constituting 59.5% of EigenLayer’s $2.1 billion TVL.
Leading LRT protocols are also expanding their presence to new chains, with initiatives like EtherFi’s collaboration with Polygon to bring wrapped eETH to the Polygon zkEVM Layer 2 network. Additionally, Puffer Finance’s pufETH is set to launch on BNB Chain with support from Binance Labs, while Renzo partners with the cross-chain interoperability protocol Connext Network to introduce native restaking on Arbitrum, Ethereum’s leading Layer 2 solution.
