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Liquid Staking Surges: Ethereum Locked in LSDs Skyrockets

Published March 11, 2024 12:58 PM
Teuta Franjkovic
Published March 11, 2024 12:58 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Ethereum’s price soared over 50% in a month, fueling the growth of Liquid Staking Derivatives (LSDs).
  • LSD value surge represents more than half of DeFi’s total value locked, with Lido Finance leading the market.
  • Lido dominates, but platforms like Rocket Pool, Binance, and Stakestone show promise.

Since the start of the year, the market for liquid staking derivatives  (LSDs) has seen substantial growth, with an addition of 1.56 million Ethereum (ETH) to LSD protocols from January 6.

This increase has significantly elevated the total value of Ethereum deposited, rising by $26.85 billion in just two months.

Ethereum’s Surge: A Catalyst for Liquid Staking Derivatives’ Growth

In a notable rally over the past week, Ethereum’s price has s soared  by 12.5%, contributing to a substantial 56.9% increase over the past month. As of Monday morning, ETH was worth about $4,000. This impressive growth trajectory of ETH against the US dollar has significantly influenced the decentralized finance (DeFi) sector, particularly the market for liquid staking derivatives (LSDs). Assets in LSD protocols surged  to $54.34 billion, representing over half of the total value locked (TVL) in DeFi protocols.

The ascent of Ethereum reflects broader market trends and investor confidence, possibly linked to various factors including technological advancements within the Ethereum network, shifts in investor sentiment, and broader economic indicators influencing the cryptocurrency market. The surge in ETH’s value is particularly noteworthy. This is because it bolsters the liquidity and overall worth of LSDs, indicating a growing investor interest in staking solutions that offer liquidity alongside investment in staked assets.

Lido Finance Leads with Over 71% of Secured ETH

In a significant uptrend, the past 64 days have seen an accumulation  of 1.56 million Ethereum (ETH), starting from January 6, 2024. On that day, a total of 12.31 million ETH were secured, with a valuation of $27.49 billion. Fast forward to the present, and the total has escalated to 13.87 million ETH, now valued at $54.34 billion. This marks an impressive increase of $26.85 billion in value.

One detail in this accumulation is the dominance of Lido Finance in the Ethereum staking landscape. Lido Finance (LDO) holds a commanding 71.04% of the total secured ETH, managing 9.85 million ETH. Following Lido, Rocket Pool (RPL) is the second-largest player, safeguarding 1.13 million ETH, valued at $4.41 billion.

Emerging Players Show Promising Growth

In the Ethereum liquid staking landscape, while Lido and Rocket Pool dominate with substantial holdings, platforms like Binance, Mantle, and Stakestone also play crucial roles, albeit with holdings of less than one million ETH each. Binance’s liquid staking protocol currently manages 891,881 ETH, positioning it as a significant player.

Stakestone , although smaller, still contributes with 339,422 ETH under its management. Other key participants include Frax, Swell, Coinbase, Stader, and Stakewise, with Mantle recording an impressive 30-day growth rate of 25.78%. Conversely, Frax and Coinbase experienced declines of 3.79% and 1.95%, respectively.

Since the inception of liquid staking protocols, these platforms have garnered considerable attention, attracting millions of ETH. This influx underlines the growing popularity and acceptance of liquid staking derivatives (LSDs) as components of the Ethereum ecosystem. Despite Lido’s predominant position, the competition is gradually escalating as other platforms inch closer, showcasing the dynamic and evolving nature of the DeFi sector.

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