Lido’s Market Share on Ethereum Drops Under 30%, Thanks to Restaking Protocols

Lido Finance, the largest staking protocol on Ethereum, with deposits of nearly 10 million ETH has been dominating a wide majority share in Ethereum’s staking market. There’s been a long-going concern regarding Lido’s domination in the staking space that could lead to the centralization of power. However, the good thing is that amid the recent rise of liquid restaking protocols on Ethereum, Lido’s market share has dropped under 30%.

Lido’s Staking Share on Ethereum

According to Ethereum contributor Anthony Sasson, there has been a notable shift in Lido’s market share of staked ETH, which now stands at below 30%. He highlights the impending impact of Puffer’s significant vampire attack, amounting to over $1 billion.

Sasson emphasizes a long-standing suggestion to diminish Lido’s growth and market share by fostering competition in the staking sector. With increased competition, he believes the Ethereum staking ecosystem has become more robust than ever. Sasson anticipates further decentralization in the staking ecosystem as time progresses.

In case you didn't notice, Lido's marketshare of staked ETH is now below 30% (with Puffer's massive >$1bil vampire attack still to come).

I've been saying for a long time that the best way to stop Lido from growing and reduce its marketshare is to increase competition in the…

— sassal.eth/acc 🦇🔊 (@sassal0x) April 4, 2024

Sasson further added that the discussion can only occur when there is a thriving free market of Ethereum staking initiatives, rather than a few projects that control the majority of the market share.”Lido is not “bad” but it is imo not the best we can do and no single entity should have too large of a marketshare anyway,” he said.

Challenging the Market Dominance

Last year in September 2023, Evan Van Ness raised concerns over Lido’s rising dominance in the Ethereum staking sector. Back then, Lido’s market share was 33%, at a critical threshold wherein a single entity could manipulate the entire Ethereum network’s operations.

Staking ETH via Lido not only generates returns from network participation but also provides users with liquid derivatives of their locked ETH, allowing them to engage in various decentralized finance (DeFi) endeavors.

The platform experienced increased deposits following the implementation of the Shapella Upgrade last year, enabling ETH withdrawals and consequently expanding its market presence. The emergence of liquid restaking platforms such as Ether.fi has posed a challenge to this dominance to some extent.