Summary
- Liquid staking token (LST) supply dropped significantly in April ahead of EigenLayer’s slashing upgrade.
- Ether.Fi saw dominant inflows post-upgrade, while other platforms like Rocket Pool and Coinbase experienced outflows.
- DeFi activity reflects risk aversion with low lending growth and increased protocol-backed stablecoin minting.
- Berachain’s $2.7B unlock on May 6 may trigger volatility across EVM-based ecosystems.
- Front-end security concerns rise with increasing DNS spoofing and social engineering attacks.
DeFi Investors Stay Cautious Despite Market Recovery
While broader crypto markets posted gains in April, DeFi metrics reveal a cautious mood among both retail and institutional players. Data from IntoTheBlock highlights declining Ethereum staking derivatives, subdued growth in high-risk lending, and rising use of stablecoin facilitators—all signaling investors’ preference for safety.
A central driver of this caution was EigenLayer’s slashing upgrade, which activated penalties for misbehavior in restaking protocols. As a result, users pulled back from liquid staking tokens (LSTs), signaling reduced risk appetite.
LST Supply Dips Ahead of EigenLayer Upgrade
April saw major outflows from LST platforms. Rocket Pool’s rETH fell sharply from over 700,000 to under 600,000 tokens by April 7. Similar downward trends were recorded for sETH2 and cbETH, with Coinbase’s cbETH dropping significantly after April 10.
Lido’s stETH, initially stable, also began to decline in the second half of the month. Wrapped Ether (wETH) saw a minor dip from 2.45 million to just over 2.40 million, while pufETH remained volatile and ultimately declined by month-end.
These withdrawals were largely driven by anticipation of EigenLayer’s slashing mechanism. With greater risk now attached to restaking, many opted to de-risk by exiting positions.
Ether.Fi Emerges as a Post-Upgrade Winner
Following the slashing rollout, LRT (Liquid Restaking Token) netflows have begun to stabilize. However, Ether.Fi has absorbed the majority of new inflows.
Analysts attribute Ether.Fi’s dominance to its growing liquidity depth and appeal to whales and institutions. This shift indicates that users are concentrating assets in platforms perceived as more efficient and secure.
The redistribution also suggests that while restaking remains attractive, users are becoming more selective in their risk exposure.
Stablecoin Growth via Protocol Facilitators
Despite the decline in LST activity, stablecoin supply—particularly GHO—has been rising. Aave Prime has led this increase through its facilitator contract, LidoGhoDirectMinter, which allows unbacked GHO tokens to be minted directly into Aave pools.
These tokens earn supply interest until borrowed, at which point they become collateralized. Spark employs a similar strategy, enabling lending expansion without relying on outside liquidity providers. This method enhances internal liquidity control but also highlights the need for strong monitoring to manage systemic risks.
May 6: Berachain Unlock Could Shake EVM Markets
On May 6, Berachain’s Boyco Vaults will unlock $2.7 billion in total value—one of the largest one-day TVL releases in recent DeFi history. This massive shift could trigger ripple effects across Ethereum and other EVM-compatible chains.
Key concerns include increased slippage, volatile APRs, and sudden shifts in strategy allocations as capital floods back into the market. Investors and protocols alike are preparing for turbulent liquidity conditions.
Rising Threats to DeFi Front-End Security
Another growing concern in the DeFi space is the rise of front-end attacks. DNS spoofing and social engineering tactics have become more common, targeting protocol users through malicious UI clones hosted by third parties.
These attacks do not exploit smart contract bugs, making them harder to detect and defend against. Users are strongly advised to double-check the source of DeFi front ends and interact directly with contracts whenever possible.
Conclusion
While crypto prices have improved, DeFi participants remain wary. With slashing risks now live, LST behavior has shifted, and Ether.Fi has taken the lead in restaking. Meanwhile, stablecoin facilitators are driving supply growth, and Berachain’s looming unlock threatens to shake up market dynamics. Add to that the increase in front-end attacks, and it’s clear: caution is still the name of the game in DeFi.