Etherscan: A Look into the Early Ethereum DeFi Ecosystem

Ritu77

The total value locked (TVL) on EigenLayer increased from $1 billion on December 23 to $9.5 billion. The TVL of liquidity re-staking tokens (LRT) increased from $152 million at the beginning of the year to over $4 billion as of February 24, showing significant growth momentum in re-staking.

The community is particularly enthusiastic, expecting a possible airdrop through accumulating EigenLayer points and receiving additional re-staking rewards with the same ETH.

In this article, we will review Ethereum staking and compare it with re-staking. We will examine use cases and explain some of the advantages and concerns related to re-staking for those looking to get involved.

Proof of Stake (PoS) Ethereum and Security
Ethereum has undergone a merge, transitioning its security model to a PoS consensus mechanism. To ensure Ethereum's security under PoS, anyone can participate as a validator by depositing 32 ETH into the Beacon Chain, granting them the right to validate new blocks and occasionally propose new blocks. Validators earn rewards for honest work, but dishonest work may result in partial or complete slashing of staked ETH.

At the time of writing, over 25% of the ETH supply (31,061,263 ETH out of 120,142,088.89 ETH) has been staked. With Ethereum's total market capitalization at $4 trillion and the total value of staked ETH at $1 trillion, executing a 51% attack on Ethereum (where the attacker controls the majority of validators) would require deploying over $1 trillion in capital (assuming all current network validators are honest) to successfully influence Ethereum in their favor.

Furthermore, validator churn limits prevent new validators from entering the network simultaneously. With the current limit of 15 epochs per cycle, an attack may take over six months to execute. Additionally, the current supply of ETH on exchanges is 13,735,858.547 ETH (approximately 11.43%), less than half of the total ETH staked, making it increasingly difficult to purchase enough ETH to attack the network.

Samiksha

I haven't looked into this ecosystem before.

Yamini003

They all say it's insured, so it must be reliable.