Crypto data and analytics platform CoinGecko just released an Ethereum Liquid Staking report for 2023, comprising a detailed overview of Liquid Staking Derivatives (LSDs) after Ethereum’s Beacon chain launch in 2020. While ETH holders could stake their assets after the launch, a minimum of 32 ETH was mandatory to become a validator. Therefore, to encourage staking for individuals with smaller holdings, LSDs were introduced.
According to CoinGecko’s report, the Shapella upgrade enabling ETH withdrawals on April 12, observed outflows from major market players including Coinbase and Rocket Pool. Meanwhile, Lido, the leading LSD provider, consistently recorded daily net inflows of +18K ETH, reaching withdrawals as high as 400K ETH. As per data from Nansen, Coinbase, Binance, and Kraken have staked the most ETH with 2.3 million, 852,512, and 799,200, respectively, in just two weeks following the upgrade.
Moreover, the report highlighted that the ETH network maintains a “churn limit” to regulate the entry and exit of validators. By the end of August, the network experienced a daily influx of 2,475 validators, with the entry queue hitting up to 96,508 validators on June 10. Furthermore, at its peak validators had to wait as long as 45 days to begin staking.
1/ Ethereum Activation Queue: What Goes Up Must Come Down.
The current wait time to activate an $ETH validator is a whopping 44 days! 🤯
Let’s dive into the data to show how we got here and why I predict the massive queue will vanish by the end of summer. 📉
— StableScarab🪲(¤,¤) (@StableScarab) July 4, 2023
CoinGecko also revealed that the top 8 Ethereum LSDs have generated an average yield of 4.4% APY since January 2022. Additionally, events such as the Ethereum Merge in September 2022, the FTX collapse in November 2022, the USDC de-pegging event in March 2023, and the Shapella Upgrade in April 2023, led to spikes in yields, with the highest recorded at 18.2% in November 2022. The report ranked,
Frax’s sfrxETH has been the best-performing LSD in terms of average yield, at 6.2% between October 2022 to August 2023. Lido’s stETH comes in second, with an average yield of 4.6%, followed closely by StakeWise’s SETH2 with 4.5%. Other LSD protocols offer yields ranging from 3.9% – 4.2%. Ankr’s ankrETH is an exception, offering an average yield of 3.5%, the lowest amongst LSD protocols.
Lastly, the report highlighted that the TVL within LSD Finance protocols grew by 5,870% since January, reaching 919.0 million by the end of August 2023. Lybra reportedly dominated the sector, accounting for 39.1% of the TVL or $359.0 million by the close of August.
TVL across top 10 LSDFi Protocols till August 2023
Subsequently, EigenLayer contributed $245.0 million in TVL since its launch in June 2023. Pendle, which was launched in 2021, also witnessed a 03% increase, surging from $15.4 million to $139.4 million between January and August 2023.
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