- ETH staked through liquid staking platforms increased progressively since the beginning of 2023.
- Liquid staking commanded 36% of the total ETH staking market share.
Ethereum [ETH] staking began in December 2o2o, providing an opportunity for investors to lock up their holdings and earn passive income on the same. The interest was fueled by the rising graph of the crypto market where ETH like other cryptos, was hitting new all-time highs on a daily basis.
Realistic or not, here’s LDO’s market cap in BTC’s terms
Staking retains sheen in 2023
Cut to 2023 and ETH has tumbled more than 60% from its peaks. The market was in a rebuilding phase at the time of writing after the bloodbath of 2022 crypto winter. Despite these headwinds, the demand for staking, if anything, has only gone northwards.
According to a Twitter user citing Token Terminal data, total ETH staked through liquid staking platforms increased progressively since the beginning of 2023.
Source: Token Terminal
The excitement around the much-awaited Shapella upgrade and its eventual rollout in 2023 played a big part in retaining user’s interest in staking. With the addition of the withdrawal feature, staking became more reliable.
Liquid staking captures market
Liquid staking protocols extended their dominance after Shapella and outperformed other staking options like centralized exchanges (CEX) and staking pools. From being a non-existent category in December 2020, liquid staking commanded 36% of the total staking marketshare at press time, as per Dune data.
Source: Dune
Liquid staking outpaced decentralized exchanges (DEXs) and lending protocols to become the largest sub-sector in the DeFi landscape in 2023, according to DeFiLlama. On a YTD basis, the total value locked (TVL) in liquid staking protocols shot up by 144% to $21,6 billion at press time.
Unsurprisingly, the heavy-lifting was done by liquid staking behemoth Lido Finance [LDO] which was the largest DeFi protocol at the time of writing, with a TVL of $14.76 billion. The fact that Lido’s TVL was more than twice as high as the next-ranked Aave [AAVE] on the list provided evidence of its superiority.
Source: DeFiLlama
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LDO sees adoption
The rise in prominence of liquid staking also started to reflect on their native tokens. LDO traded at $2.03 at the time of publication, having soaked gains of 7.45% in the last 30 days.
With its increasing value, the token caught the attention of traders. The total number of LDO holders grew 6% over the last month, data from Santiment revealed.
Source: Santiment