Decentralized finance protocol Lido Finance surpassed six million Ether (ETH) deposited on its liquid staking platform, pushing deposits to 6,008,480 ETH. Liquid staking has become one of the largest DeFi sectors within the crypto markets, with a value of $16 billion. Liquid staking platforms, including Lido, allow users to keep their locked-up tokens in a liquid form with a derivative token that can be used for lending and borrowing. This has propelled Lido Finance to the top spot in DeFi with a current combined asset value of $12 billion.

The Ethereum blockchain's Shanghai upgrade, which enabled withdrawals from staking contracts from April 12, has boosted the liquid staking sector. Data shows that crypto investors have reinvested previously locked-up tokens through liquid staking platforms. Though Lido is the current market leader with a 79% market share, according to Nansen, other platforms are closing the gap, such as Frax Finance and Rocket Pool, which have yielded a combined net inflow of $367 million.

On the other hand, centralized exchanges, Binance and Coinbase, have experienced a significant outflow after offering their own derivative tokens with liquid staking options. In total, the two exchanges have seen an over of $700 million withdrawn. Lido has not yet activated withdrawals, but will do so following the release of their v2 upgrade in late May.

As the liquid stETH derivative token closely follows the price of ETH, Lido likely isn’t facing additional withdrawal pressure. Besides the potential of high yields, liquid staking also provides users with more liquidity, as it is easier and faster to switch between different cryptocurrency projects with derivative tokens than with traditional methods.



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