Ethereum LSDFi Sector Booms as Staking Surpasses Liquidation, Diva Challenges Lido
Summary:
The Ethereum-based liquid staking derivatives finance (LSDFi) ecosystem has significantly grown in 2023. Despite the introduction of ETH withdrawals, many Ether holders prefer to stake their assets for better-yield opportunities. LSD protocols now make up 43.7% of the total staked ETH, with Lido dominating the field. Moreover, an emerging LSDFi platform, Diva, has seen a surge in popularity by offering increased incentives to stakers, posing a direct challenge to Lido.
The liquid staking derivatives finance (LSDFi) ecosystem built around Ethereum has experienced a boom this year, with increasing numbers of Ether (ETH) holders deciding to stake their assets rather than sell. Despite the Ethereum Shapella upgrade in April 2023 making ETH withdrawals possible, an LSDFi report released by CoinGecko on the 16th of October indicated a growth of 58.7x in the sector from the start of the year. By August 2023, 43.7% of the total 26.4 million staked ETH was attributed to LSD protocols, with Lido holding nearly a third of the staked market. Figures on the growth of the LSDFi sector highlight that ETH holders prefer to re-stake for potentially higher yields than liquidate and withdraw their assets. CoinGecko's data suggest that, since withdrawals became available, over half the time (55%) the exit queue remained empty and stood below 10 validators for 77% of the time. LSDs came into the market to offer smaller ETH holders a chance to take part in staking and release liquidity post the Ethereum Beacon Chain's December 2020 launch. According to CoinGecko, from the start of this year, the total value locked in the top 10 LSDFi protocols, excluding Lido, soared to over $900 million. Total locked value in LSDFi protocols has increased by 5,870% since January 2023, whereas the total value in decentralized finance shrank by about 8% within the same time frame, based on DefiLlama’s data. The average yield since January 2022 for LSD protocols is 4.4%, though this is predicted to decrease as the staked ETH volume grows. At present, there are approximated 27.6 million ETH staked, worth around $43.4 billion, as per Beaconcha.in. In the last two weeks, Ethereum supporters have been applauding Diva, an LSDFi platform, which they claim is performing a "vampire attack" on Lido-- attracting users and liquidity from Lido via increased incentives. Diva rewards stakers of ETH and Lido staked ETH with tokens that are locked up for divETH. Since October, Diva's total locked value has soared 650% to 15,386 stETH, equating to around $24 million, according to Divascan.
Published At
10/18/2023 4:55:48 AM
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