EtherFi is currently one of the most talked about DeFi projects in the Ethereum Ecosystem, thanks to the hype of it being new and the airdrop that is currently taking place.
Sadly, the current total value locked or TVL, which is the amount of money locked in the EtherFi protocol, is currently going down by around $500,000 from its highest level of all time, giving signs that the hype might be over.
Current EtherFi DeFi TVL
According to the data from DeFillama, the current total value locked of the funds in the EtherFi protocol is going down from its all time high.
Currently, the total value locked of the platform is at around $2.88 Billion which is a huge accomplishment considering how new the platform is.
It went down to around $2.6 Billion after reaching its peak all time high value of around $3.1 Billion, showing a significant decrease in just a couple of days.
EtherFi is a platform that you can use to stake ETH in order to get a liquid staking token in the form of eETH.
This means that EtherFi falls under the liquid staking derivative or LSD, category that users can use to earn double rewards on one crypto.
For example, by using EtherFi, users can lock 1 ETH in order to get 1eETH that they can then lock again for passive rewards or just use it regularly.
If the reward from locking the ETH is around 3% and the reward from locking eETH is also 3%, then the total reward that was gained from using the LSD Token from ETH was around 6%.
This is the benefit that most LSD platforms are after, as they want double rewards from one crypto or just lock their crypto for passive rewards without having to technically lock their crypto.
Even though this benefit can be considered well to explain the growth of EtherFi’s TVL, it is not the main reason as why the TVL went high and then suddenly drops.
Airdrop Hype Over
The hype of EtherFi was created through the airdrop event that was done a couple of months back for eligible users.
Currently EtherFi has started distributing their airdrop rewards for eligible users that they explained on their airdrop claim site.
There are seven users that are eligible for the airdrop who basically participated in the development process of EtherFi before it became this popular.
Rewards are given to users who basically used EtherFi, EtherFi’s LSDs, EtherFi’s NFTs, and overall interacted with the EtherFi community and ecosystem.
This can explain the drop of TVL all of a sudden, because after the distribution phase of the airdrop has started, there is no real urgency to lock tokens or coins on the EtherFi platform anymore, aside from finding passive rewards.
After the eligibility criteria was announced and the claiming process has started, people who are not really keen on using EtherFi for the long run, which usually includes airdrop hunters with limited capital, are taking their locked coins and tokens out from the platform.
So, will this be the downfall of EtherFi? Probably not. This is because the hype of LSDs or liquid staking derivatives is not over yet as it is one of the most significant innovations in the crypto space right now.
So, if there were any more updates from EtherFi, or they did exceptional marketing heading into the bull market and during the bull market itself, the TVL might go up again, even higher than the current highest TVL.
Considering it also runs on Ethereum, the chance of it going to zero is almost impossible as most Ethereum DeFi DApps stay in the market for a long time, with an exception that the team does not rug pull the project.
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