Welcome to the protocol highlight of the month.

At Artemis, we aim to bring light to crypto and highlight real businesses in crypto.®

Today, we spotlight ether.fi, one of the first liquid restaking protocols that has taken over the market and established itself as a major DeFi protocol across all of crypto.

The Genesis: From Traditional Fund to DeFi Innovation

What started as a straightforward hedge fund in 2023 has rapidly evolved into one of the most significant players in the decentralized finance ecosystem. ether.fi's journey began when its founder, fresh from a successful company exit, sought to enter the crypto space through the most accessible route available, launching an investment fund.

Initially focused on ETH staking, the team quickly identified a critical gap in the market. While Lido dominated the liquid staking space as a mature, established player, the emerging restaking narrative presented an untapped opportunity. This insight would prove to be the foundation for ether.fi's explosive growth.

The Strategic Pivot: Recognizing Market Opportunity

The transition from fund to protocol wasn't accidental. It was driven by data and market analysis. The team recognized that restaking was becoming a defining trend in DeFi, and there was room for a new player to capture significant market share by combining restaking capabilities with superior user experience.

This strategic insight led to the development of a comprehensive, non-custodial alternative to traditional banking built entirely on crypto infrastructure. The staking protocol became the foundation, allowing the team to build substantial total value locked (TVL) and a user base before layering on additional products.

Rapid Market Domination Through Differentiation

Within just two years, ether.fi has achieved remarkable scale, managing approximately $10.4 billion in TVL and establishing itself as the second-largest liquid staking protocol after Lido. This growth stems from two key differentiators:

Security-First Approach: ether.fi has invested very heavily in security infrastructure, including comprehensive audits, formal verification processes, and continuous monitoring systems.

Deep DeFi Integration: The protocol has achieved extensive integration across major DeFi platforms including Aave and Arbitrum, providing users with broader utility for their eETH tokens.

Deep Dive: ether.fi's Product Ecosystem

Stake Product - The Foundation Product: ether.fi's staking platform allows users to stake ETH, BTC or USD (Stablecoin) and receive eETH, weETH, weETHs, weETHk, eBTC, eUSD, all liquid staking token that can be used throughout DeFi while still earning staking rewards. What sets this apart is the integration of restaking capabilities through Eigenlayer, Karak, Symbiotic and Babylon, allowing users to earn additional yield by securing other protocols.

Liquid Vaults - Institutional-Grade Yield Management: The Liquid Vaults product represents ether.fi's move into sophisticated yield optimization strategies. Working primarily with Centora, a trusted vault curator managing billions in capital, these vaults employ complex DeFi strategies to generate returns beyond basic staking yields. The ~200 basis points fee structure reflects the institutional-grade risk management and active strategy implementation. This product appeals particularly to users seeking higher yields while maintaining liquidity, and represents ether.fi's ability to package complex DeFi strategies into accessible products.

Cash Product - The DeFi Banking Bridge: Perhaps the most innovative offering, ether.fi’'s Cash product represents a true bridge between traditional finance and DeFi. The crypto credit card isn't a standalone product but rather part of an integrated fintech experience that allows users to spend their crypto holdings while maintaining yield generation. The lending component provides users with credit facilities backed by their crypto assets, while the upcoming DEX integrations will create a seamless trading experience. This product is driving significant user acquisition, with at least half of new Cash users being entirely new to the ether.fi ecosystem.

Building a Diversified Revenue Engine

ether.fi has successfully developed multiple revenue streams that demonstrate the platform's evolution beyond simple staking:

• Staking Operations (50% of revenue): Generated from staking and restaking rewards on their $10B TVL
• Liquid Vaults (25% of revenue): Earning fees from yield optimization strategies managed through partnerships
• Cash Product (Fast-growing segment): Revenue from credit card transactions (~150 basis points), lending activities (100-400 basis points), and upcoming DEX integrations

The company projects significant growth in their Cash product, expecting it to become a major revenue driver as they capture both retail and institutional demand.

Expanding Beyond Ethereum

While initially built around ETH's staking and restaking capabilities, ether.fi has strategically expanded its asset base. The platform now offers USD and BTC denominated products, recently launched HYPE LST, and plans continued asset diversification in coming quarters.

This expansion addresses a broader market opportunity, with leadership noting that both retail and institutional adoption are driving growth across different product lines and geographic regions.

Token Economics and Value Accrual

ether.fi has implemented a sustainable tokenomics model with their ETHFI token, featuring:

• Buyback Mechanism: Approximately 15% of protocol revenue (up from initial 5%) is used to purchase ETHFI tokens on the open market
• Staking Rewards: Token holders can stake ETHFI to receive buyback distributions
• Membership Tiers: Token holdings provide access to enhanced platform features and benefits

Looking Forward: The $1B Revenue Vision

ether.fi's leadership has set an ambitious goal of reaching $1 billion in annual revenue while maintaining strong margins. This target reflects their confidence in the DeFi banking category's potential, which they believe could grow 100x larger than current DeFi markets and potentially challenge traditional neobanks.

The path to this goal involves continued user onboarding into real-world DeFi applications, with the main risk being execution—ensuring they build products that users genuinely love and adopt at scale.

Market Positioning and Future Outlook

As the digital asset ecosystem matures, ether.fi represents a new category of DeFi protocols that prioritize sustainable revenue generation over pure speculation. Their focus on fundamental metrics—revenue growth, TVL expansion, and active user engagement—positions them well for long-term success as the market increasingly values profitable, utility-driven protocols.

ether.fi continued to increase its size and market share as the re-staking narrative solidified, establishing itself as the undisputed leader, commanding 74% of the category’s TVL. ether.fi has even achieved a 2nd place position in the combined liquid staking+restaking market, bowing only to Lido, the long-time sector leader.

ether.fi’s market share of Liquid Restaking Token protocols grew to 74% by August, 2025

ether.fi’s TVL is the second largest amongst all liquid staking protocols

The company's evolution from hedge fund to comprehensive DeFi banking platform illustrates the rapid pace of innovation in digital assets and demonstrates how data-driven insights can identify and capture emerging market opportunities in this dynamic space.

Thanks for reading! Want to connect with etherfi? Feel free to email us at team@artemis.xyz, and we'd be happy to introduce you.