March 21, 2024

Liquid Restaking Tokens: Growth Potential After $ETHFI

Today, we are introducing a new blog series called Web3 Trends to Watch. In this series, we round up the latest emerging trends and narratives in crypto tokens, discovered through Scopechat's AI-powered Web3 analysis. Data cited in this report is as of March 21, 2024.

On March 18, major liquid restaking platform officially launched its $ETHFI token, debuting at $4.13. $ETHFI then proceeded to plummet by about 20% hours after its debut, coinciding with a bearish crypto market. Since then, the token has clawed its way back to surpass its debut price and has risen by about 40% over the past 24 hours.

There are four crypto tokens under the liquid restaking governance narrative. The other major token in this narrative, aside from $ETHFI, is Pendle ($PENDLE), which is also bullish today after growing by 18% over the past 24 hours. In total, this narrative has a current market cap of about $793M and has grown by 28% since yesterday and 133.30% since last week, according to Scopechat data.

We think that the sub-$1B valuation for the liquid restaking sector has major room for growth., which currently has a $2.88B TVL, is the first mover among major liquid restaking platforms. Hence, the current market cap for the sector doesn't include projects such as Puffer Finance and Renzo, which have TVLs of $1.3B and $1.2B, respectively. If or when these platforms decide to launch their own tokens, the liquid restaking narrative will likely grow to reflect the huge TVLs on the three platforms.

By comparison, the restaking narrative, which also includes liquid restaking governance tokens, is currently valued at $4.86B, but the biggest market caps in this sector involve wrapped $ETH tokens such as $eETH ($1.39B), $weETH ($1.395B), and $rsETH ($670.8M).

At the moment, high-performing tokens in this category include TENET ($TENET), which grew by 27.04% over the past 24 hours, and Kelp Earned Points ($KEP) with a +15.46% rise. $KEP is the token of liquid restaking platform Kelp DAO ($670.6M TVL).

But even in this wider category, there is one major catalyst for growth: EigenLayer. The $ETH restaking platform dominates the market with a TVL of $11.35B, and its announcement last week about its preparation for a mainnet launch could be a sign of better days ahead for the sector. While the project has not yet said if it has plans to launch its own token, a potential EigenLayer token has the potential to increase the value of the restaking category in the crypto market by billions of dollars, given the sheer size of its TVL.

To give further context to the huge potential of the liquid restaking narrative, let's take a look at a related sector: liquid staking. The 18 governance tokens under this sector have a combined valuation of $5.4B, despite an 18.5% decline over the past week, with the largest player being Lido ($LDO) at a $2.35B market cap. The possible entry of tokens by EigenLayer, Puffer Finance, and Renzo can potentially bring the liquid restaking governance narrative at par with its liquid staking counterparts.

Another comparison that can be made with the liquid restaking narrative is the liquid staking sector, which currently covers 84 tokens, including several wrapped versions of major cryptocurrencies such as $ETH, $BNB, and $SOL. The liquid staking narrative has a current market cap of $47B, despite a 7.8% average price decrease for the sector compared to a week ago. Even if the liquid restaking narrative captures just a fraction of this $47B valuation, it will represent a massive jump for the sector.

To summarize our analysis of the liquid restaking governance tokens narrative, here's a table that shows its recent market cap and growth rates compared to other relevant narratives. The liquid restaking governance sector might see 7x growth in the future, given that Liquid Staking Governance tokens' market cap is $5.4B.

To learn more about the future trajectory of $ETHFI and other tokens under the liquid staking and restaking sectors, you can use Scopechat to get comprehensive reports like this one below.

Scopechat data generated for this report was extracted as of March 21, 2024, 7 AM UTC.

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