Lido investors withdraw $2.5bn in Ether from staking giant as rivals circle

Lido investors withdraw $2.5bn in Ether from staking giant as rivals circle
Deposits to Lido have been declining since mid-March.
  • Lido’s share of the staking market has fallen to 28%.
  • Its decline comes amid the rise of EigenLayer and liquid restaking protocols.

In a sign that new rivals are gobbling up Ether, Lido’s share of the multibillion-dollar staking market on Ethereum fell to a two-year low this month as deposits plummeted.

Since March 1, investors have withdrawn around 800,000 Ether deposited in Lido, which is worth about $2.5 billion, according to DefiLlama data. In the last 30 days, it has lost more Ether than any other staking service.

Lido’s share of the staking market has fallen from about 32% in November to just under 29%.

A warning

Lido’s decline will cheer some hardline proponents of decentralisation, who have long warned the protocol’s staking dominance could lead to eventual control of Ethereum itself if left unchecked.

Since a major upgrade in September 2022, Ethereum has run on staking instead of the Proof of Work consensus process used by Bitcoin miners. Ethereum now requires that users stake, or lock up, their Ether in exchange for a modest annual yield.

Compared to Bitcoin mining, it is an energy-efficient method of confirming and ordering transactions on the blockchain. Some users stake Ether themselves while others entrust their Ether to centralised exchanges like Coinbase, or liquid staking protocols like Lido and Rocket Pool.

Lido is the largest protocol in decentralised finance. Investors have deposited more than $30 billion in crypto on Lido. Its liquid staking token, stETH, is the most-used collateral asset in DeFi.

Critics have suggested that Lido self-limit by capping its share of staked Ether. But the cooperative that governs the protocol overwhelmingly rejected a proposal to self-limit in 2022.

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Now, Lido’s market dominance is weakening anyway.

Staking market shifts

Its decline is part of a broader shift in Ethereum’s staking business. Liquid staking protocols account for less than a third of all staked Ether, according to data compiled by pseudonymous data analyst Hildobby. That’s down from almost 37% for much of last year.

Centralised exchanges have also stumbled. Since November, their share of the staking business has fallen to 25% from 30%.

Meanwhile, protocols offering something called liquid restaking are booming, and now account for more than 6% of all staked Ether. Those protocols make it easy to deposit Ether or staked Ether in EigenLayer, a year-old protocol that has quickly become one of the most talked-about projects on Ethereum.

The share of “unidentified” stakers has also grown over the past six months, from about 15% to more than 18%, according to Hildobby.

This group includes players who are not liquid staking or restaking protocols, centralised exchanges, at-home hobbyists, or institutional stake pools.

Deposits decline

While liquid staking protocols and centralised exchanges have lost market share, the loss has been particularly pronounced at Lido.

After a staking-related upgrade in April 2023, deposits to Lido surged. Between May and February, monthly deposits have fluctuated between 200,000 Ether and 1 million Ether.

In March, however, EigenLayer deposits cratered. Users deposited a mere 32,600 Ether in Lido last month. Less than 16,000 Ether has been deposited in Lido through the first 22 days of April.

Coming changes

The slump comes as Lido makes several long-anticipated changes.

This month, Lido welcomed solo stakers in a bid to increase its decentralisation.

And members of Lido DAO, the cooperative that governs Lido, are currently voting on a proposal that would give stETH holders a say in the protocol’s governance and give stakers the ability to rage-quit.

“Even if the protocol is failing, users can still permissionlessly exit with their funds intact, and there’s nothing token holders can do about it,” Lido said in a blog post announcing the vote.

“This is something that is truly new to financial markets and infrastructure. Something that is only made possible by the non-custodial nature of on-chain DeFi.”

Aleks Gilbert is a DeFi correspondent based in New York. Have a tip? Email him at

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