Puffer Finance, a Binance Labs-backed liquid restaking protocol, rises to the top 4 by TVL in 24 hours

Puffer Finance, an Ethereum liquid restaking protocol built on EigenLayer, has announced that it has received investment from Binance Labs, the $10 billion venture capital and incubation arm of crypto exchange Binance. Leveraging the hype around the investment announcement, the project also started allowing users to deposit stETH, a liquid staking token issued by Lido, into its protocol.

Thanks to that, within 24 hours of launch, Puffer Finance attracted $194 million worth of staked ETH, becoming the fourth-largest liquid restaking protocol in the market. Its competitors above are ether.fi, Kelp DAO and Renzo, according to TVL data from DefiLlama.

Liquid restaking is a new activity that reuses liquid staking tokens such as stETH to stake into validators of other networks. Most projects do not have tokens with great growth potential and restaking has recently become an area of interest for the community as the Dencun upgrade on Ethereum approaches.

Puffer Finance’s goal is to diversify the validator set and reduce the concentration of Ethereum’s Proof of Stake, while solving the challenges that individual validators face.

The project targets two main types of customers: general users and individual validators who do not have enough 32 ETH to perform Ethereum validation.

For general users: Allows users to stake ETH to receive pufETH and profits. For validators: Instead of having to stake up to 32 ETH to run an Ethereum node, they will only need 2 ETH to run a Puffer node. This is just the early launch phase of the project. Puffer Finance is expected to launch fully by the end of this year. By then, users will need to lock Lido’s stETH to mint pufETH. This pufETH can be converted back to ETH and restake into validators.

In general, this plan could help eliminate Lido’s dominance, while increasing the number of native ETH, not just staked ETH as it is now.

In addition, Puffer Finance attracts a lot of attention partly thanks to its point reward system. For the crypto community, these points can be seen as an airdrop token strategy.

There is evidence from the fact that many projects “hint” at airdrops with a point reward model such as friend.tech, Blast, MarginFi, Rainbow Wallet, so it is understandable that users expect Puffer Finance to airdrop tokens.

Currently, users can deposit stETH into the protocol to receive points, and earn more points if they deposit stETH from EigenLayer.

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