Lido’s Ethereum staking market share dips below 30%

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The recent influx of Ethereum stakers brought the market share of liquid staking solution Lido down to 29.57% from 32% in December 2023, helping reduce concerns around Lido’s growing influence on the ecosystem.

Lido’s popularity in Ether (ETH) staking, coupled with the lack of competition in the space, allowed the platform to earn a lion’s share of the ETH staking market.

The community feared that any entity representing over 33% of the market could influence various aspects of the Ethereum chain.

As of April 4, data from crypto analytics platform Dune shows that Lido’s market share for staked ETH dipped below 30%.

ETH stakers overview. Source: Dune Analytics

Other prominent entities contributing to the ETH staking ecosystem are crypto exchanges Coinbase (14.04%) and Binance (3.75%), and Ethereum staking platform Kiln (3.5%).

However, the second-largest entity in ETH staking is marked as “unidentified,” which currently represents 16.9% of the market.

ETH stakers ranking and overall contribution. Source: Dune Analytics

There are 26 known entities that contribute to ETH staking in total, including crypto exchanges Kraken (2.4%), Bitcoin Suisse (1.6%), OKX (1.2%) and Upbit (1.1%).

According to Ethereum co-founder Vitalik Buterin, stake pools should not have more than 15% control and should choose to “keep increasing its fee rate until it goes back below 15%.”

Source: Vitalik Buterin

The Lido DAO (LDO) community previously tried to solve the ETH staking dominance issue by proposing a hard limit in May 2022. However, the proposal was rejected by the DAO with a 99.81% vote in June 2022.

The Lido DAO community voted against adding a hard limit on staking contribution. Source: snapshot.org

Increasing competition among ETH staking service providers is expected to play a major role in further decentralizing the staking ecosystem.

Related: Ethereum earnings tripled in Q1 2024, reaching $370M

In a recent Coinbase report, in-house analysts noted the possibility of several risks around Ethereum restaking and the issuance of so-called liquid restaking tokens (LRTs).

Using the Ethereum restaking protocol Eigenlayer as an example, the analysts said, “While this (restaking) can increase earnings, it can also compound risks” as it allocates the same funds to similar validators for increased yield.

“As such, LRTs may be incentivized to maximize their yields in order to gain market share, but these could come at the cost of a higher (albeit hidden) risk profile,” they added.

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