The liquid betting industry has been thriving on the Ethereum (ETH) network of late since the introduction of the Beacon chain. Liquid Staking is an automated process that allows users to stake their ETH on the Beacon Chain, a proof-of-stake blockchain.
As of February 9, the total value locked (TVL) across the top three Ethereum-based liquid staking protocols had risen above $11 billion, with Lido (LDO), Coinbase (COIN), and Rocket Pool (RPL) all posting gains in the range of 20-40% in the last month, according to DeFi LIama.
Lido has the highest TVL of any liquid staking platform at around $8.39 billion, while Coinbase’s wrapped ETH totaled $1.77 billion, up 24% over the last month.
Rocket Pool and Frax Ether have seen the largest gains of the top five projects over the past month, with increases of 40% and 97%, respectively.
Why are liquid stake protocols on the rise?
The Ethereum beacon chain has been making waves lately due to its ability to support liquid staking. Just like traditional staking, users still earn rewards when they stake their tokens. However, they have the added benefit of moving your assets while staked.
Allowing users to keep their tokens liquid while opting for better platform security improves overall liquidity.
In addition, Beacon Chain’s shorter window of participation allows users to change their strategies quickly to capitalize on market trends.
Market and price action analysis
Coinbase and Rocket Pool have been making waves in the liquidity betting space. Coinbase Ventures recently Announced would join the Rocket Pool Oracle DAO.
According to a survey by Gnosis co-founder Martin Köppelmann, Lido currently controls 27.5% of the shares, while Coinbase comes in second with 14.5%. This has sparked a debate over whether Ethereum is becoming too centralized, with Bitcoin maximalists arguing that this proves it is.
Looking at the Lido and Rocket Pool price action on CoinMarketCap, we can see that Lido has been more volatile and posted an impressive 17% gain over the past 7 days, driving its price to $2.71 as of Feb 9 with a market capitalization. of $2.27 billion, making it the 30th largest cryptocurrency by market capitalization.
By comparison, Rocket Pool also saw steady price action, slowly rising to $46.48 as of this writing, generating gains of almost 12% over the past week.
This suggests that traders are becoming more confident in the Ethereum ecosystem and are no longer risk averse following the multi-billion dollar collapse of the Terra blockchain in May 2022.
Frax Ether jumps on the bandwagon
Frax Ether (FRXETH), a new liquid staking platform on Ethereum, has a TVL of nearly $150 million, according to Defi Llama. FRXETH’s value increased by almost 97% in the last month, making it the 8th largest liquid staking platform, suggesting higher user engagement.
the road ahead
The arrival of the Ethereum 2.0 Beacon Chain seemed to have boosted user interest in liquid staking.
Still, users should be aware of the potential risks. For example, Beacon Chain could mean significant savings in energy and other validator costs. However, if attacked, reversals could result in heavy losses.
All in all, liquid staking is an exciting development that could revolutionize the landscape. However, with proper precautions and due diligence, you can capitalize on your benefits and manage your risks.
