- Potential growth in Solana liquid staking
- Centralization and risks on Ethereum
- Role of retail investors
Solana-based liquid staking could significantly grow thanks to sustained retail adoption.
Potential growth in Solana liquid staking
Liquid staking creates more capital efficiency for investors by offering an equivalent of the initial staked token that can be deployed in other decentralized finance (DeFi) applications. Bybit Research suggests that enhanced capital efficiency in DeFi could lead to a more than fivefold growth in liquid staking on Solana. According to DefiLlama, at publication time, the total value locked (TVL) in Solana-based liquid staking is worth over $3.8 billion.
Centralization and risks on Ethereum
Liquid staking is already the largest protocol category on Ethereum, with a combined TVL of over $39.5 billion. However, the growing market segment has raised centralization concerns. For instance, Lido accounts for over 57% of Ethereum’s liquid staking market with a TVL of $22.9 billion. Bybit Research believes that such centralization risks aren't a concern for Solana. The research claims that the outsized concentration from a single party on Ethereum won't repeat in Solana due to the presence of many players.
Role of retail investors
According to Bybit's report, retail investors may play a key role in driving nearly fivefold growth in the Solana-based liquid staking market through liquid staked tokens (LSTs). The report claims that mainstream exchange-backed LSTs will act as the bridge between casual users and DeFi opportunities in Solana.
In conclusion, significant growth is expected in Solana-based liquid staking, primarily driven by retail investors and the support from the DeFi community.
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