ethereum‘s liquid staking derivatives financing (LSDFi) ecosystem has seen a surge in growth this year as Ether (eth) holders opted to stake rather than liquidate.
Even though eth withdrawals were enabled with the ethereum Shapella update in April 2023, an LSDFi on October 16 ethereum-liquid-staking-report-2023″ target=”_blank” rel=”noopener nofollow”>report from crypto data aggregator CoinGecko said the sector has grown 58.7 times since January.
As of August 2023, LSD protocols accounted for 43.7% of the total 26.4 million eth staked, with Lido holding the lion’s share of nearly a third of the total market staked.
LSDFi sector growth statistics show that eth holders would rather re-stake for better return opportunities than liquidate their assets after withdrawing.
CoinGecko noted that since withdrawals were enabled, the output queue remained at zero for more than half of the time (55%) and remained below 10 validators for 77% of the time.
LSDs were introduced to allow smaller eth holders to participate in staking and unlock liquidity after the launch of the ethereum Beacon Chain in December 2020.
Since the beginning of this year, the total value locked (TVL) on the top 10 LSDFi protocols, excluding Lido, has risen to more than $900 million, according to the report.
The TVL on LSDFi protocols has grown by 5,870% since January 2023. Comparatively, the total TVL of decentralized finance contracted by around 8% during the same period, according to DefiLlama.
The average return on LSD protocols since January 2022 has been 4.4%, although this will decrease as the amount of eth staked increases.
There are currently 27.6 million eth at stake valued at around $43.4 billion. according to Beaconcha.in.
Related: Liquid bet emerges as a turning point for cryptocurrency investors
Over the past two weeks, ethereum advocates have applauded the rise of the LSDFi Diva platform, which they say is carrying out a “vampire attack” on Lido, luring users and liquidity away from Lido by offering greater incentives. .
The Diva vampires’ attack on the Lido is gaining momentum
Over 11,000 Steth deposited to bring the number down https://t.co/L6uITU3Bdq pic.twitter.com/vtzVXdKypD
—Evan Van Ness (@evan_van_ness) October 13, 2023
Diva offers token rewards to stakers who lock their eth and the eth (stETH) staked by Lido to divETH. Since the beginning of October, Diva’s TVL has increased 650% to 15,386 stETH valued at around $24 million, according to divascan.
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