As investors look for efficient financial instruments, the total locked value of liquidity-returning tokens has grown by more than 8,000% since the beginning of the year.
The LRT market has skyrocketed by 8,300% this year, growing from $164 million to nearly $14 billion. This reflects the rapid evolution of the crypto landscape towards more user-friendly financial instruments, according to a research report from crypto venture firm Node Capital provided to crypto.news.
Analysts attribute the sharp rise to the fact that traditional restaking protocols are struggling to keep up with the growing demand, with LRTs now capturing a significant share of the market. Ether.fi (ETHFI), a non-custodial delegated staking protocol, is leading the way, with over 50% of the LRT market, the venture firm notes.
Protocols benefit from arbitrage opportunities
Node Capital token analyst Or Harel suggests that the surge in LRT adoption can be attributed to the fact that major liquidity redistribution protocols have noticed the hype and “capitalized on this technical arbitrage opportunity.”
“In a short period of time, these LRPs have accumulated billions of dollars in staker capital and built a sophisticated infrastructure of operators, positioning themselves as key intermediaries in the supply chain,” he added.
However, analysts at Node Capital also express growing concerns about centralization. As user preferences shift toward convenience, centralized solutions like Lido are gaining popularity, and their “dominant market share is creating a new form of centralization.” According to Token Terminal data, Lido Finance (LDO) had staked more than $33 billion in cryptocurrency as of June, surpassing EigenLayer, which managed roughly $20 billion.