Lido Dominates Liquid Staking

Ethereum continues on its path to becoming fully PoS as it transitions to ETH2. If you intend to hold ETH for the long-term, you’ve likely had to decide whether or not to stake your ETH and help validate the network. While the staking yield prevents you from being diluted, since you would be earning a slice of new ETH emissions, there are a few caveats at the moment. The first is the technical hassle that comes with personally staking while the other is related to liquidity. Simply put, ETH2 staking is one directional at the moment. You can deposit / stake your ETH, but you can’t withdraw it yet. This lock up can be a major detractor for people and understandably so. Not only do they forgo the liquidity, but they also lose out on the utility of that ETH in the mean time. Want to borrow against your ETH to generate DAI? That would be tough to do if said ETH is locked up in staking.

Lido Finance, a liquid staking derivative platform, offers a solution. It gives participants who deposit ETH a 1:1 token known as stETH. This allows users to earn the staking yield from ETH2, reduces the technical burden placed on the individual since Lido handles staking on their behalf and, perhaps most importantly, stETH is liquid. Lido is the current market leader in the staking derivatives space and, as of now, the race isn’t very close. With that said, how has it fared recently and does its market position justify the valuation? Let’s dive into the data to see.

As seen above, Lido has gained significant traction on its liquid staking products, stETH and bLuna, amassing over $4.57 billion in TVL. On Terra, Lido’s bLuna has already captured over 18% of all circulating