EigenLayer Surpasses Aave in TVL

EigenLayer allows users to earn rewards and contribute to network security by depositing liquid or natively staked ETH.

By TVL, the restaking protocol EigenLayer is the second largest protocol after the well-known decentralized finance protocol Aave, which has its total value locked (TVL) surpassed.

This follows the temporary removal of deposit limits on EigenLayer’s network.

According to data accessible on DeFiLlama, the TVL for EigenLayer is $11.24 billion at the time of writing, whereas the TVL for Aave is $10.7 billion.

Commentators have been captivated by the TVL “flip” and have questioned whether staking or liquid staking should be incorporated into a protocol’s TVL when staked native assets are typically excluded from the tally.

TVL integrates the cumulative quantity of tokens deposited into a smart contract and is utilized as collateral for borrowing and yielding on DeFi protocols such as Aave. To avert TVL inflation, borrowed coins are excluded from the TVL.

Debate Over TVL Calculation: EigenLayer’s Unique Approach

On EigenLayer, however, users can earn additional rewards and contribute to the network’s security by depositing liquid or natively staked ETH into the smart contracts and triggering slashing conditions.

According to Flipside data scientist Carlos Mercado, TVL is intended to be a cost-effective method of measuring participation. It is crucial, according to him, to distinguish native assets, such as ETH, from synthetic equivalents, such as staked or wrapped ETH.

“Failure to account for this results in an issue where the chain’s TVL is inflated, as the same token can be tallied multiple times over,” explained Mercado.

He stated that this reasoning can be extended to protocol-specific TVLs as well. Adding that EigenLayer constitutes a restaking; therefore, depositing stETH or cbETH could be considered a tripling of the TVL count.