a16z invests $100 million in Ethereum protocol ‘EigenLayer’

In a recent funding round, venture capital firm Andreessen Horowitz, also known as a16z, invested $100 million in EigenLayer, Ethereum’s leading total value locked (TVL) rescheduling protocol. This investment, reported by Bloomberg, marks a16z as the sole investor in this round.

EigenLayer attracts attention from major players

EigenLayer, which earlier closed a $50 million funding round led by Blockchain Capital in March, has now caught the attention of one of the biggest players in the venture capital world. The focus on crypto-related companies appears to be increasing again, as VC funding rose 2.5% to $1.9 billion in the final quarter of 2023. This is the first increase since March 2022, according to PitchBook, possibly driven by the launch of the first Bitcoin exchange-traded funds (ETFs) in January.

Ali Yahya, general partner at Andreessen Horowitz, sees the partnership with EigenLayer as an opportunity to stimulate the development of new applications. He highlighted the potential for creating innovative services that deploy capital for rewards, based on EigenLayer’s capabilities.

What does EigenLayer offer?

Founded in 2021, EigenLayer provides a platform where validators and stakers can reinvest derivative tokens for liquid staking. This includes popular tokens such as Lido Staked ETH and RocketPool’s rETH. These tokens can then be staked in other decentralized finance protocols (DeFi) for additional returns.

With an impressive TVL of $7.91 billion, EigenLayer currently stands as the third largest protocol on Ethereum. The total value locked in the protocol has increased by more than 347% in the past month, according to data from DefiLlama. This growth was further boosted by a temporary lifting of the strike limit on February 5, which led to a significant increase in TVL.

Domination in rescheduling protocol market

EigenLayer dominates the rescheduling protocol market, a category that represents approximately $7.94 billion in TVL, according to DefiLlama. The protocol accounts for a whopping 98% of this category and sits at the top of liquid staking protocols with a combined TVL of $45.7 billion.

This investment by Andreessen Horowitz highlights the growing confidence in the potential of blockchain technology and specifically in the role Ethereum plays within the decentralized finance sector.