Study: Surge in Popularity of Liquid Restaking Token Protocols Driven by Growing User Trust

The surge in the total value locked and adoption of liquid restaking tokens increased from approximately $164.3 million in January to $13.812 billion by June 20, underscoring the growing trust in them. As was the case in January, Ether.fi remains dominant in the LRT market, accounting for approximately 50% of the total value locked, or $6.52 billion. LRTs are considered a better option for those seeking diversified and potentially more lucrative staking opportunities with a simplified user experience.

Liquid Restaking Token Protocols May Potentially Offer Higher Returns

According to a Node Capital report liquid restaking token (LRT) protocols have seen a remarkable surge in popularity, eating into the total value locked (TVL) of other decentralized finance (defi) subsectors. After starting the year with a TVL of $164.3 million, LRTs’ locked value had grown to $13.812 billion by June 20, the report data shows.

The substantial TVL growth is said to underscore the “rapidly growing adoption and trust in LRTs within the DeFi ecosystem.” However, Ether.fi still dominates the LRT market, accounting for approximately 50% share, or $6.52 billion. Other key players in the LRT market include Renzo, Puffer, Kelp and others.

Commenting on the explosive growth of LRTs during a period when some liquid staking protocols saw significant ETH outflows, the report said:

“LRT protocols are positioning themselves as a superior alternative to Liquid Staking Tokens (LSTs) by abstracting away the complexities of connecting and operating multiple simultaneous restaking services. This simplification of complex processes allows users to potentially achieve higher returns compared to traditional staking or LSTs, while still maintaining control over their assets.”

LRT Protocols: Key to Achieving True Decentralization

Designed to abstract the complex processes of multiprotocol staking, LRTs enable the simultaneous deployment of staked assets across multiple actively validated services (AVS). This abstraction not only improves capital efficiency but also creates new opportunities for yield optimization. All of this occurs without burdening users with the underlying complexities of cross-protocol interactions, the report explained.

The report also contends that for an industry founded on decentralization but is still dominated by centralized entities, LRT protocols may be what is needed to facilitate a shift toward true decentralization.

Meanwhile, the report asserts that unlike LSTs, which typically offer a standard return on investment — currently estimated at 3% annually — LRTs potentially offer higher returns by leveraging multiple blockchains. Although they come with their unique forms of risk, LRTs are seemingly a better option for those seeking diversified and potentially more lucrative staking opportunities with a simplified user experience.