The Complete Worth Locked (TVL) of the EigenLayer redraw protocol has surpassed that of the favored decentralized finance protocol Aave, making it the second largest protocol over TVL.
This comes after EigenLayer’s choice to briefly take away deposit limits on its community.
On the time of writing, the TVL for EigenLayer is $11.24 billion, whereas the TVL for Aave is $10.7 billion, in line with data out there on DeFiLlama.
The TVL ‘flip’ has attracted commentators who increase the query of whether or not or not staking, or liquid staking, ought to be included in a protocol’s TVL if its personal belongings deployed are sometimes not included within the rely.
On a DeFi protocol like Aave, TVL information the entire variety of tokens deposited into a wise contract and used as collateral to borrow and earn returns. On this case, borrowed cash will not be included within the TVL to keep away from inflating the TVL.
Nonetheless, on EigenLayer, customers can take part in securing the community and earn further rewards by depositing already natively staked ETH or liquid staked ETH into the community’s good contracts and subjecting them to aggressive phrases.
Carlos Mercado, a knowledge scientist at Flipside, instructed Blockworks that TVL was designed as a cost-effective option to measure participation. He notes that you will need to distinguish between native belongings corresponding to ETH and artificial variations of the identical asset, corresponding to wrapped ETH or staked ETH.
“When you do not adapt to this, you’ll run into issues with inflating the chain’s TVL as a result of the identical token may be counted a number of instances,” Mercado mentioned.
This logic may also be utilized to protocol-specific TVLs, he mentioned. The addition that EigenLayer itself is a retake signifies that depositing sETH or cbETH may be thought of as triple counting TVL.
Blockworks analysis analyst Ren Yu Kong notes that TVL has historically been used as a metric to measure the entire quantity of belongings in a wise contract.
“You might consider staking contracts with withdrawal knowledge pointing to EigenLayer contracts as a model of good contracts, and so EigenLayer TVL would rely as TVL in frequent sense,” Kong mentioned.