coindesk.com
ETHFI hit a record high $7.2 Wednesday, withstanding the declines in ether and the broad-market CoinDesk 20 Index.
The performance could bolster valuations for other liquid restaking tokens ahead of their airdrops, one analyst noted.
Liquid restaking protocol Ether.fi's governance token (ETHFI) jumped to a record high Wednesday as hype over restaking continued to captivate crypto investors.
The token, which represents voting power in the protocol's decision-making process, surged as much as 50% in the past 24 hours to $7.2. It outperformed ether (ETH), bitcoin (BTC) and the broad-market CoinDesk 20 Index (CD20), which all posted slight declines during the same period.
With the rally, ETHFI recovered from a price slump following its March 18 airdrop, when, after initially rising to $5 on Binance, it slumped below $3 in the following days. Airdrops are distributions of free tokens, usually to early investors, users and adopters, which protocols leverage as incentives to bootstrap demand for their services.
Liquid restaking protocols such as Ether.Fi have emerged as one of the hottest new sectors in decentralized finance (DeFi), and are designed to reuse Ethereum's proof-of-stake blockchain to secure other networks through the original restaking platform, EigenLayer. Ether.fi has become the leader in the liquid restaking field, and its total value locked (TVL) has ballooned to over $3 billion from $100 million since the start of of the year, DefiLlama data show. Rival platforms such as Kelp DAO, Puffer Finance, Renzo and Swell also attracted significant deposits, ranging from hundreds of millions of dollars to over $1 billion. Read more: Liquid Restaking Tokens: What Are They and Why Do They Matter?
The strong price performance of ETHFI, the protocol's governance token, could bolster valuations of other liquid restaking tokens (LRT) airdropped in the future, Ignas, a prominent DeFi analyst, noted.
"The higher the ETHFI price, the higher relative valuations of all other LRT governance tokens will be," Ignas said in an X post. "Our Swell, Renzo, Puffer, Kelp, and obviously EigenLayer airdrops will get juicier the higher ETHFI goes."