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Liquidity Refinancing Token Market Soars 8,300% on Demand for ‘Easy-to-Use Tools’
As investors seek efficient financial instruments, the total value locked in liquidity refinancing tokens has increased by more than 8,000% since the beginning of the year.
The LRT market has skyrocketed 8,300% this year, from $164 million to nearly $14 billion. This reflects a rapid shift in the cryptocurrency landscape toward more user-friendly financial instruments, according to a research report from crypto venture capital firm Node Capital, shared with crypto.news.
Total value locked in liquid restking tokens | Source: Dune
Analysts attribute the dramatic increase to the fact that traditional restacking protocols are struggling to keep up with the growing demand, with LRTs now taking a significant market share. Ether.fi (ETF), a non-custodial delegated staking protocol, is leading the charge, boasting over 50% of the LRT market, the VC firm notes.
Protocols exploit arbitrage opportunities
Or Harel, token engineering analyst at Node Capital, suggests that the notable increase in LRT adoption can be attributed to major liquidity restacking protocols noticing the excitement and “taking advantage of this technical arbitrage opportunity.”
Liquid staking protocols by market share | Source: Token Terminal
“In a short period, these LRPs have amassed billions in staker capital and created sophisticated infrastructure for operators, positioning themselves as key enablers of the supply side,” he added.
However, analysts at Node Capital also express growing concerns regarding centralization. As user preference shifts toward convenience, centralized solutions like Lido are gaining more and more traction, and their “dominant market share creates a new form of centralization.” According to data from Token Terminal, Lido Finance (I DO) had committed more than $33 billion in cryptocurrency to staking by June, surpassing EigenLayer, which managed about $20 billion.