Lido Finance, once a dominant platform for Ethereum staking, is experiencing a decline in its market share. This situation raises questions about the company's future and the entire Ethereum staking segment.
Lido Finance's Market Share Decline
According to Tom Wang of Entropy Advisors, Lido Finance's share in the Ethereum staking market has fallen to 25%. This is the lowest figure since March 2022. In February, the company held 32% of the market, while in March this figure dropped to 29.6%. Over the past six months, Lido's share has decreased by 5%.
Impact on the Staking Market
The market is also showing activity from centralized exchanges, such as Binance and Coinbase, which account for 8.3% and 6.9% of the market, respectively. Meanwhile, 19% of the market is occupied by unidentified validators, which includes both individual stakers and large organizations that do not disclose their wallet data. The volume of deposits in staking reached a record 36.5 million ETH, after which it fell to 36.1 million ETH. Lido was the leader in net outflow over the past month, while the queue of validators waiting to exit grew sharply.
Experts' Conclusions
Analysts from Galaxy Digital Research attribute the increase in the validator queue to heightened requirements introduced by the Pectra update, but the main factor relates to the cascading reduction in leverage in LST-assets. 'This volatility was driven by a sharp reduction in ETH supply on Aave, initiated by large withdrawals from the platform,' analysts explained. Notably, WETH loan rates on Aave have risen from 2% to 18%, making popular leveraged trading strategies unprofitable. This led to investors closing their positions, which resulted in the loss of the peg of Lido's stETH token to ETH.
The dynamics in the Ethereum staking market remain tense, and further changes in platform policies and market conditions could significantly impact the situation.
