Since 2020, the number of apps for liquid staking on the Ethereum blockchain has steadily increased. As of the first week of October 2023, a total of 23 platforms for liquid staking derivatives (LSD) held 12.4 million ether, with a market value of over $20 billion. The top three LSD protocols currently control 11.041 million ETH, controlling a huge 89.18% of the total ETH locked.
3 LSDs With 11 Million Ether
With an addition of 370,000 ETH in just five days, the amount of ethereum (ETH) owned through liquid staking derivatives (LSD) protocols reached the 12 million barrier around a week ago. In essence, an LSD is a decentralized platform that enables users to stake their ETH in a liquid form, preserving their flexibility and liquidity while allowing them to earn rewards at the same time.
The top three protocols at the moment control 89.18% of the entire market share for LSD tokens: Lido, Rocket Pool, and Coinbase's Wrapped ETH platform. With 8.79 million ETH held, Lido Finance, founded in 2020, is the largest LSD holder of ethereum (ETH).
This demonstrates that Lido's $14.55 billion in ether constitutes 70.96% of the market for LSDs as a whole. Individuals receive Lido's staked ether, or STETH, in exchange for ETH. When compared to the tokens with the greatest market caps, STETH is among the top ten according to the current market valuation.
STETH is held by 269,080 different addresses, and there have been about 1.15 million transfers of the coin. Currently, there are 8,790,000 STETH tokens in circulation, with the top 100 holders together controlling 69.26% (6,088,042.02 tokens) of the total STETH supply. According to a Coingecko analysis released on September 29, 2023, STETH has an average yield of 4.6%.
The second-largest LSD project is Coinbase's Wrapped ETH platform, which at the moment has 1.3 million ethereum worth $2.26 billion. There are currently 1,297,211 CBETH tokens in circulation, distributed among 40,653 different addresses. CBETH has 210,532 transactions total since the project's launch.
Compared to STETH, the distribution of the Coinbase LSD token is a little bit more concentrated, with the top 100 holders jointly controlling 96.43% (1,250,865.13 tokens) of the total supply. The CBETH average yield in August 2023 was above 3% on average and had reached 4% on few occasions in the previous year.
With a cache of 951,264 ETH, Rocket Pool ranks third among the top LSDs in terms of ETH holdings. The market share of Rocket Pool in the LSD space is 7.68%, compared to Coinbase's 10.48%. A token called RETH is given to users that swap ETH using Rocket Pool; there are presently 529,872 RETH in circulation overall.
There are 18,784 owners of the LSD token RETH, and there have been 197,928 transactions. A total of 67.91% (359,823.38 tokens) of the RETH supply are held by the top 100 holders. LSDs like Binance Staked Ether, Frax Staked Ether, and Stakewise, each of which holds a sizable amount of ethereum, are listed below Lido, Coinbase, and Rocket Pool.
Liquid staking derivatives continue to carve out a position for themselves in the decentralized finance (defi) industry by giving users a way to stake (earn) without having to meet any minimal requirements. The top eight LSDs have generated an average yield of 4.4% annual percentage yield (APY) since January 2022, according to the same Coingecko study.
LSDs have their share of detractors, many of whom contend that the idea encourages a centralized supply and validators. On the other hand, some supporters argue that by increasing the diversity of the validator set, LSDs will strengthen the decentralization and security of Ethereum (and other chains).
What are your thoughts on the top three LSD platforms and the tokens that go along with them? Post your ideas and viewpoints on this topic in the comments area below.