February 6, 2024

Ethereum, liquid restaking hype elevate Web3 TVL by $1.7B

This past week, the Web3 industry's total TVL went up by $1.71B, or 1.64%, to its current level of $105.94B. Following its $1.31B rise from last week, the Web3 industry's major ecosystems saw small declines that were overshadowed by Ethereum's rise amid the recent hype around liquid restaking projects. The overall Web3 TVL grew even though only 46 out of 222 Web3 ecosystems showed positive growth.

In this edition of the Web3 Hot Trends report, we discuss the latest trends and bright spots across Web3 ecosystems and projects.

Ecosystem TVL Growth

TVL is an essential indicator of how much capital is currently engaged in the decentralized finance (DeFi) space. Here are some key observations from TVL growth data we tracked this week.

1. Ethereum grows its TVL by $2.04B amid liquid restaking hype.

The world's top Web3 ecosystem grew to $75.05B in TVL after a 2.80% increase this week. While the community has yet to decide on Ethereum's major Dencun upgrade, $ETH restaking has been on the rise, with restaking protocol EigenLayer growing its TVL by over 70% to $3.4B. The project recently removed caps on its LST (liquid staking tokens) restaking pools and announced new partnerships with Frax Finance, Liquid Collective, and Mantle.

The 0xScope team recently shared more information about liquid restaking in this tweet thread, as well as a Money Flow graph about EigenLayer's rapid TVL rise.

2. Exponential growth on 2 small ecosystems.

Little-known blockchains Mode and EthereumFair (ETHF) saw their TVLs rise 289x and 141x, respectively. Mode, a Layet-2 DeFi platform powered by Optimism, added $25.8M to its TVL after it launched its Sunrise mainnet and a related airdrop. Meanwhile, Ethereum fork EthereumFair recently rebranded to DIS Chain and conducted a token swap, driving up transactions on the platform to the tune of $7.3M.

3. Avalanche lost $123.1M in TVL as token unlock looms.

Ahead of fellow Ethereum alternatives such as BSC, DOLANA, and Optimism, Avalanche saw the biggest TVL decline this week, bringing down its locked funds balance by 9.66%. $AVAX is down 8% this week, and the project will unlock $344 million worth of its tokens on February 21.

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Project TVL Growth

Diving deeper into the projects’ TVL growth, the 0xScope team spotted positive trends from the projects that stood out this week:

1. Magpie tops TVL growth rankings for 2nd straight week.

Magpie followed its 525.60% TVL growth on Ethereum last week, worth $175M, with a further addition of $137M in TVL this week, representing 60.66% growth. Last week, Magpie integrated with EigenLayer to launch a SubDAO called Eigenpie, a new isolated liquid restaking platform, which allowed the DAO to cross $100M in TVL. This week, Magpie said its TVL is now above $500M.

2. Liquid restaking hype also drives up TVLs for Swell, Bedrock.

Swell grew its TVL by $66.5M (+14.49%) one week after it launched Restaked Swell Ether ($rswETH), which offers uncapped access to EigenLayer restaking points. This growth outpaced all other projects except for Magpie and Aave. Meanwhile, Bedrock's TVL jumped by 133.05% (+$34.4M) after turning its $uniETH token into a liquid restaking token, elevating the project to the No. 5 spot in this week's rankings.

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Weekly Project Volume

In this segment, we track which Web3 projects have seen the greatest increase in volume over the past week. This metric is an indicator of the hottest projects in terms of incoming money flow or increased usage. Here’s what stood out:

1. Solana DEXes top volume growth rankings after Jupiter airdrop.

Orca, a Solana-based crypto marketplace, added $1.1B to its weekly TVL, representing a 73.77% growth to its current $2.58B weekly volume and outpacing all other projects this week. Meanwhile, fellow Solana-based DEX Raydium grew its weekly volume by $274.7M (+14.60%) to outpace other projects except for Orca and DeepBook. The recently concluded airdrop of Solana-based Jupiter DEX has likely elevated trading activity and interest in other Solana projects.

2. DeepBook adds $349.4M to weekly volume amid Sui's rise.

Nestled between Orca and Raydium in this week's rankings is Sui-based DeFi infrastructure project DeepBook, which saw its weekly volume rise by 288.10%. While there are no new updates about Deepbook, Sui observers noted that its projects have seen major surges in trading volume in recent weeks.

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Weekly Project Fee

This segment assesses which projects are raking in significant revenues from their operations. Here’s what stood out:

1. Ethereum, Bitcoin increase fees earned by $10M each this week.

The top Web3 projects in terms of weekly fee growth are the top 2 cryptocurrencies. Liquid restaking explains part of Ethereum's 30.80% fee growth, while Bitcoin's 74.02% fee increase is a bit trickier to pinpoint, given that its network fees fell 30% in the past week.

2. Recent bug a likely cause of Friend.tech's 214.19% fee jump.

Among the top 10 projects in this list, SocialFi project friend.tech showed the biggest change by percentage, resulting in an additional $348,093.88 in fees earned this week. However, this rise is likely triggered by a recent bug on the dapp's pricing system for its keys, which has resulted in users overpaying by 187 $ETH.

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Project User Growth

Project user growth can offer insights into the adaptability and popularity of specific projects. Here’s what stood out:

1. 2 liquid restaking dapps lead user growth rankings.

New liquid restaking project Puffer Finance took in $135 million worth of $ETH deposits just one day after its launch on February 1. Unsurprisingly, the project increased its users to 26,453 users, showing 265x growth.

Following Puffer Finance in the rankings is another newly-launched liquid restaking dapp Eigenpie, with 65x user growth to 6,536 customers, all of which are active on the platform.

2. Polygon-based chess game follows last week's 286.96% growth with 463.936% rise.

Anichess, a Web3 gaming app created by Anomica Brands and Chess.com on Polygon, has seen its user base grow from 2,173 to 75,213 in just three weeks, representing a strong 34.6x growth.

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Users, as defined by 0xScope’s tools, pertain to real users behind addresses, calculated by 0xScope’s proprietary entity and bot recognition algorithm.

TVL stands for the total value locked in a project. 0xScope computes an ecosystem's TVL as the sum of the TVLs of all projects under that ecosystem. Crypto assets bridged to an ecosystem without being stored in Web3 projects do not count under that ecosystem's TVL count.

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