EigenLayer, the largest Ethereum-based restaking protocol with over $15 billion in total value locked (TVL), is facing potential yield issues due to its rapid growth. The protocol, which allows users to stake their liquid staking tokens (LSTs) and earn rewards, recently removed limits on all LSTs just six days after its mainnet launch on April 10.
However, concerns have been raised about the security demands for EigenLayer’s services, which are currently below 10% of its TVL. This discrepancy could lead to a significant drop in yields for investors. Chudnov from the 3Jane crypto-native derivatives protocol pointed out that none of the Actively Validated Services (AVS) on EigenLayer will come close to needing $1.5 billion in security, let alone $15 billion.
To address these challenges, Chudnov suggests short-term solutions like introducing new tokens to increase security funds. In the long term, EigenLayer may need to integrate more deeply with the decentralized finance (DeFi) ecosystem to stabilize and enhance yields.
In other news, EigenLayer’s AVS Puffer has recently raised $18 million in a Series A funding round. As EigenLayer navigates the complexities of its rapid growth and security demands, it will be crucial for the protocol to implement strategic solutions to ensure the sustainability of investor yields.
