Ethereum redraw protocol Puffer Finance has partnered with Anchorage Digital to offer institutional clients access to pufETH, Puffer’s liquid redraw token, through Anchorage’s regulated custody platform.
The integration allows institutions to gain exposure to Ethereum staking and return recapture while operating within compliant custody and security frameworks. For institutional players who have historically been cautious about engaging directly with DeFi protocols, the partnership offers a more familiar on-ramp to Ethereum-native yield products.
Puffer differentiates its recovery model by distributing validation across a decentralized group of operators rather than relying on a handful of large validator providers, which the protocol says reduces concentration risk. The protocol also mentions drastic protection against penalties and a buffer designed to absorb losses before they reach pufETH holders, a feature aimed at satisfying institutional risk models that require clearly defined downside scenarios.
The partnership comes at a difficult time for liquid take-back protocols. Aside from etherfi and kelp, most fluid withdrawal protocols struggle to retain users. When points-based incentive programs expired, capital disappeared and consolidated to the most established locations.
Puffer launched in February 2024 and attracted nearly $200 million in total value (TVL) on its first day, as the cash withdrawal industry boomed on the EigenLayer hype. By October 2024, Puffer’s TVL had grown to over 500,000 ETH, worth over $1.3 billion at the time.
Bullet TVL
Today, Puffer’s core protocol TVL is just $62 million, according to DeFiLlama. The decline reflects a broader trend in the liquids withdrawal industry after the initial airdrop-fueled frenzy.
The PUFFER token tells a similar story. The token hit an all-time high of nearly $1.00 in December 2024, but has since cratered, hitting a low of $0.025 last week, according to Coingecko.
The Anchorage deal signals Puffer’s increasing focus on the institutional market as a path to sustainable growth, a pivot away from the retail-driven points campaigns that initially powered its TVL.