Lido Flexes with Staking Surge as The Merge Approaches

Lido’s dominance over Ethereum staking continues to grow.

According to data from Dune Analytics, Lido, a liquid staking provider, is the single-largest Ethereum staking service with almost 29% of all Ether staked on the Eth2 Beacon Chain. The protocol sports 90% dominance over the liquid staking sector. The second-largest staking provider is centralized exchange Kraken with 8.75%, followed by Staked.us with 3.35%.

Beacon Chain

The Ethereum team launched the Beacon Chain in December 2020, paving the way for the network’s transition to Proof of Stake and enabling hodlers to stake their Ether for the very first time.

But stakers are unable to withdraw their funds until future upgrades have been completed after Ethereum’s highly anticipated chain-merge dubbed The Merge. It is slated to go live during the third quarter of this year. The long-standing lack of withdrawal functionality has facilitated the emergence of liquid staking providers.

Liquid staking providers allow users to stake their ETH and receive a tradable token representing their stash, allowing them to earn staking rewards while remaining liquid in the market. With solo validators required to lock up at least 32 Ether in order to run a node, these platforms also allow smaller ETH hodlers to access staking.

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The Defiant

Despite rivals like Rocket Pool and Stakehound also providing liquid staking services, Lido has emerged as the sector’s undeniable leader.

Roughly 3.4M ETH is currently staked through Lido, with the protocol representing 51,754 depositors. Rocketpool is the second-largest liquid staking service with 166K ETH or 4.4% of the sector’s total, followed by Stakehound with 63K ETH or 1.7%.

Lido now ranks as Ethereum’s fourth-largest DeFi protocol with a total value locked (TVL) of $10.7B according to DeFi Llama. It is also the second-largest DeFi protocol by cross-chain TVL with $19B. Nearly $8B worth of Terra is also staked via Lido.

Influx of ETH

Deposits to the Beacon Chain have recently surged in anticipation of the merge, with 532,448 Ether or the second-largest weekly influx of ETH being staked in mid-March. Deposits have since slowed, with roughly 250,000 ETH being staked weekly during April so far.

More than 11.7M ETH or roughly 9.9% of Ethereum’s circulating supply is currently locked up for staking. There are 366,222 validators currently operating nodes on the Beacon Chain

The expected date of The Merge has also become the subject of significant speculation in recent months. While much of 2022 has seen analysts estimate the event will take place sometime around June, recent comments from developer Tim Beiko suggest the upgrade won’t go live until a “few months after.”

But not everyone is certain that The Merge has been pushed back. On April 17, Starkware’s ‘odin_free’ commented that this month’s coming fork of The Merge on Ethereum testnet, Goerli, could determine when Ethereum’s chains are combined.

“If the testnet fork next week goes well, the summer merge date might be announced on April 29th (next core dev),” they tweeted, adding “Innovation comes from failure. Don’t be scared of delays. Nothing to worry about.”

Correction: Due to an editing error, a previous version of this story incorrectly reported that Lido controlled 90% of the staking sector. Lido holds 90% of the liquidity staking sector.