Liquid restaking protocol EigenLayer has recently made a significant move by temporarily removing its 200,000 ether (ETH) staking cap, resulting in a surge of $750 million in total value locked (TVL) within just a few hours. Data from DefiLlama revealed that EigenLayer experienced an influx of $750 million, leading to a cumulative TVL of more than $3 billion. This marked a substantial $1 billion increase compared to the previous day’s TVL.

Restaking, a strategy employed by investors to earn additional rewards on ETH that they’ve already staked on the main Ethereum blockchain, involves locking up tokens in an address on the chain in exchange for a steady stream of interest while contributing to the platform’s “proof of stake” system.

EigenLayer presents an opportunity for investors to earn additional interest on their staked ETH tokens by “restaking” them to secure other chains. Notably, EigenLayer currently supports popular liquid staking tokens (LSTs) such as lido staked ETH (stETH) and rocket pool ETH (RETH). Platforms like Lido and Rocket Pool stake ETH on behalf of users, issuing LSTs representing one’s stake, which then accrue interest and can be traded like any other token.

The removal of EigenLayer’s caps on LSTs was intended to stimulate organic demand, as indicated in a recent blog post from the project. Although a new cap is set to be implemented on February 9th, EigenLayer has expressed its intention to permanently remove the deposit limit in the future.

In addition to the adjustment in staking caps, EigenLayer has announced plans for its mainnet launch for Operators and EigenDA. The former will provide a means for investors to operate a node, while the latter, a decentralized data availability service, is poised to become the first actively validated service to be built on EigenLayer.

The soaring interest in EigenLayer in recent months is evident with the emergence of projects like Puffer Finance and Ether.fi, which offer substantial rewards to users who partake in restaking. However, this restaking boom has raised concerns among developers about EigenLayer’s “shared security” model potentially straining the Ethereum network.

Overall, EigenLayer’s decision to lift its staking cap has triggered a significant inflow of funds and heightened interest in the platform. As the project continues to evolve and expand its offerings, it will be crucial to closely monitor the potential impact on the broader Ethereum ecosystem and ensure that the network remains robust and sustainable amid the growing popularity of liquid staking protocols.