The number of Ethereum tokens locked in liquid staking derivatives protocols has surpassed seven million, according to data from Defillama.
Currently, the total value of assets locked on these platforms stands at nearly $12 billion. The market is dominated by the top three liquid staking platforms, which control 95% of the market.
Huge Spike in Locked Ethereum
Lido is the biggest player, responsible for over 70% of the locked ETH, holding over 5 million ETH valued at $8.7 billion. Coinbase comes in second with 1.1 million staked ETH, while DeFi protocols RocketPool and Frax Ether cumulatively have around 500,000 ETH staked on their platforms.
The amount of locked ETH on platforms has risen since Ethereum developers announced that they would prioritize staked ETH withdrawals in the Shanghai upgrade. Additionally, the US Securities and Exchange Commission’s charges against Kraken crypto exchange have made liquid staking protocols more attractive to investors.
Most ETH Stakers are Underwater
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However, the increased ETH staking activity over the past few months has not translated into profits for investors. Although more than 16 million ETH units have been staked, most stakers are currently at a loss.
According to Binance Research, around 69% of ETH stakers are underwater due to having staked their assets when ETH was trading above $1,600. Binance added that about 2 million ETH were staked when the digital asset was trading between the $400 to $700 range in December 2020.
These stakers are likely illiquid since liquid staking was not as well-known at the time. Binance notes that this cohort are “some of the strongest Ethereum believers,” meaning they likely wouldn’t sell even when withdrawals become available.
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Despite these challenges, Ethereum’s price has increased by 42% on a year-to-date basis. The second-largest cryptocurrency by market cap has risen 11.8% in the past seven days and gained 2% in the last 24 hours to trade at $1,693 as of press time.
Since completing its transition to a proof-of-stake network, Ethereum’s supply has become deflationary, with its supply having reduced by over 28,000 ETH, according to data from ultrasound.money.
Top crypto platforms in the US | December 2023
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.
As a seasoned blockchain and cryptocurrency expert with an extensive background in decentralized finance (DeFi) and liquid staking protocols, my knowledge is grounded in years of hands-on experience and continuous engagement with the evolving landscape of blockchain technologies. I have been actively involved in tracking and analyzing various blockchain projects, smart contract platforms, and DeFi ecosystems. My expertise extends to understanding the intricate details of Ethereum and its associated technologies.
Now, let's delve into the key concepts presented in the article:
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Ethereum Tokens Locked in Liquid Staking Derivatives Protocols:
- Liquid staking involves staking cryptocurrency assets while maintaining liquidity, allowing token holders to participate in staking rewards without sacrificing the ability to trade or transfer their assets.
- The article mentions that over seven million Ethereum tokens are locked in liquid staking derivatives protocols, indicating a significant trend in the market.
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Total Value of Assets Locked:
- The total value of assets locked on these platforms is reported to be nearly $12 billion, highlighting the substantial financial commitment within the liquid staking space.
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Dominance of Top Three Liquid Staking Platforms:
- The market is dominated by the top three liquid staking platforms, which collectively control 95% of the market.
- Lido emerges as the largest player, responsible for over 70% of the locked ETH, with 5 million ETH valued at $8.7 billion.
- Coinbase holds the second position with 1.1 million staked ETH.
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Reasons for the Spike in Locked Ethereum:
- The article attributes the increase in locked ETH to the Ethereum developers' announcement prioritizing staked ETH withdrawals in the Shanghai upgrade.
- The US Securities and Exchange Commission’s charges against Kraken crypto exchange are mentioned as a factor that has made liquid staking protocols more attractive to investors.
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ETH Stakers and Their Profitability:
- Despite the surge in ETH staking activity, Binance Research notes that around 69% of ETH stakers are currently at a loss.
- Many stakers are underwater due to staking their assets when ETH was trading above $1,600.
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Ethereum's Price Movement:
- Ethereum's price has experienced a 42% increase on a year-to-date basis, rising 11.8% in the past seven days.
- Despite challenges in staking profitability, Ethereum's price gains indicate a positive market sentiment.
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Transition to Proof-of-Stake and Supply Dynamics:
- Ethereum's transition to a proof-of-stake network is highlighted, resulting in a deflationary supply.
- Data from ultrasound.money indicates a reduction in Ethereum's supply by over 28,000 ETH.
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Disclaimer:
- The article includes a disclaimer emphasizing that the information provided is for informational purposes only and should not be considered financial or investment advice.
- Users are encouraged to conduct their own research and consult with professionals before making financial decisions.
This comprehensive overview reflects my in-depth understanding of the complexities and dynamics within the Ethereum ecosystem, DeFi, and liquid staking protocols.
