LRT Protocols Reverse Netflow Amid EigenLayer’s Slashing Rollout, EtherFI Records Massive Inflows

Liquid Restaking Token (LRT) netflows have overturned movements after EigenLayer introduced its slashing mechanism yesterday, according to metrics reported today by the IntoTheBlock.

While EtherFi is experiencing massive inflows after the announcement of the slashing feature, other LRT protocols are witnessing significant outflows. This shift shows that traders are redistributing their holdings to EtherFi, preferring the LRT protocol’s security.

EigenLayer rolls out slashing feature

EigenLayer has experienced an interesting shift change in LRT netflows after it rolled out its slashing feature, with significant inflows into EtherFi.

As the metrics reported by IntoTheBlock today, LRT netflows have overturned their past downturn movements after the Ethereum chain launched its Slashing mechanism. This mechanism is designed to penalize stakers and users who violate the restaking platform’s rules, strengthening integrity and accountability within the network.

Although this launch has triggered increased demand for LRT protocols, funds inflows are moving proportionately. EtherFi, a major LRT protocol, registered inflows of more than $45 million after the slashing feature’s launch.

Other LRT protocols, such as Rocket Pool and Lido and others, experience continuing outflows. Rocket Pool recorded an outflow of $8 million following the launch, while Lido registered a loss of $12 million. This shift shows that investors increasingly prefer EtherFi, possibly due to its superior yield returns and user-friendly trading platform.

While EtherFi’s TVL has increased by 18% in the past 2 days, climbing to $1.2 billion as of today, the TVL of the wider LRT market surged by only 5% during the same timeline, currently standing at $3.8 billion. This event highlights the evolving nature of DeFi markets, where protocol-focused projects can quickly attract investor sentiment and shift money movements. The event provides traders with a great chance to engage with LRT assets and take advantage of the price performance of EtherFi’s primary asset, ETHFI, which recorded a price increase of 12% from yesterday.

The growth of restaking

In the rapidly growing DeFi market, EigenLayer paves the way as a revolutionary protocol that brings a narrative called restaking service to the market. On EigenLayer, crypto users can reuse their staked ETH on the Ethereum protocol and earn extra rewards by securing networks of other services, popularly known as AVS (Actively Validation Services) like Eigenpie, EtherFI, and others, like the ones named above.

As per metrics from DefiLlama, the TVL of Liquid Restaking Token (LRT) on Ethereum currently stands at $$3.8 billion. This figure could rise in the coming months as increasing number of ETH stakers continue to diversify their holdings in various DeFi platforms to earn extra income.