A crypto news story today concerns the liquid staking sector, which has returned to near an all-time high after a $15 billion surge.
Changes to the Ethereum blockchain have contributed to this success.
Crypto news: assets in liquid staking protocols have increased 292% since 2022
Today’s crypto news cannot fail to include the record-breaking liquid staking industry, which has returned to near its all-time high.
In essence, assets in liquid staking protocols have increased 292% since 2022, registering a $15 billion surge.
This is the sector that involves staking, which is when tokens are staked to contribute to the operation of blockchains, in exchange for rewards.
Overall, DefiLlama showed that the total value of crypto locked in these liquid staking services jumped 292% to $20 billion from its low in June 2022, when “the crypto winter” was upon us.
Despite several crypto crashes due to the collapse of crypto-exchange FTX and the stablecoin TerraUSD, today the liquid staking sector is back near all-time highs.
Also contributing to that climb was Ethereum’s blockchain, with its transition from Proof-of-Work to Proof-of-Stake that took place mid-September 2022.
Crypto news: liquid staking soars thanks in part to Ethereum’s blockchain
One of the blockchains playing a leading role in this surge in the liquid staking industry is Ethereum.
Indeed, people who block Ether tokens to help operate Ethereum are currently earning the equivalent of about 4% annually in the form of other coins. Rival blockchains, such as Solana and Cardano, also offer rewards for staking.
In the case of Ethereum, Steve Berryman, chief business officer of staking service provider Attestant, has calculated a nearly 40% increase in the number of validators since the network upgrade in April.
By validators, he means all participants in the Ethereum network who are staking their Ether to help validate transactions on the blockchain.
In any case, Lido is now DeFi’s largest service based on the $14 billion in assets locked on the platform. Lido’s native token has risen 60% this year, outpacing the 27% increase in an indicator of the largest 100 crypto assets.
Concerns over a possible centralization of Lido Finance
In early September, the crypto-community showed concerns about Lido Finance’s growing power in the liquid staking market.
Basically, the fear of Ethereum enthusiasts and DeFi, is precisely that the undisputed leader of Ethereum liquid staking, may lead the mechanism to a centralization of the network.
And indeed, as of earlier this month, Lido boasted of a TVL of $14.117 billion, with as many as 8,551,078 ETH delegates, 267,000 validators and a marketshare of 32.4%.
As for Ethereum liquid staking, after Lido, there are Coinbase with an 8.6% marketshare, Binance with 4.52%, and Figment with 4.13%.
Given such supremacy of Lido, competing crypto protocols such as Rocket Pool, StakeWise, Stader Labs, Diva Staking, and Puffer Finance have mobilized to ensure that none of them will own more than 22% marketshare in Ethereum staking.
Contrary to these choices, Lido decided instead to go its own way, establishing itself as DeFi’s main crypto protocol.