Can Lido Sustain Its Leadership in Ethereum Staking?

The total number of participants engaged in Ethereum (ETH) staking amounted to 915,588, with a cumulative staked amount of 29,298,821 ETH.

The majority of the Ethereum staking activity occurs on Lido, posing potential challenges to decentralization, as it holds 292,000 validators and 9,328,284 ETH. Coinbase comes in second place, hosting around 137,000 validators and having 4,382,049 ETH staked. Binance follows in third place, with 36,000 validators and 1,162,816 ETH.

List of ETH Stakers. Source: Dune

The complexity of staking or transaction verification on the Ethereum network raises concerns about the potential dominance of large pools. This centralized approach carries various risks, such as the possibility of controlling more than 51% of the decision-making power, leading to potential attacks and other threats that could compromise the entire network’s security.

New player in the Ethereum staking arena

Dune data also emphasizes a trend where validators frequently opt for pools hosted on centralized platforms (CEX). In the aforementioned list, the top 3 include ETH Stakers, two of which are centralized exchanges. This trend might be attributed to the lower entry point for staking regarding the minimum amount of cryptocurrency required. Independent pools tend to have a higher entry barrier in this regard.

One of the contributing factors to Coinbase securing the 2nd position in Ethereum staking is the attractive 2.87% Annual Percentage Yield (APY) that the platform offers. The market capitalization of staked Ethereum on the exchange is estimated to be around $62.856 billion.

Conditions for staking Ethereum on Coinbase. Source: Coinbase

Notably, Binance is presently providing a similar APR for Ethereum staking at approximately 2.84%. Coinbase might be leading the competition because its rate was initially 3.67% and was subsequently reduced.

Reddit users are engaging in discussions about the decrease in Ethereum APR on Coinbase. Source: Reddit

Figment Exchange holds the 5th position among Ethereum stakers. Data from Dune indicates an outflow of nearly 282,000 stakeholders in the past month, making the platform the bottom performer on this list. Simultaneously, Lido gained 263,520 stakers. Stakekwiz pointed out that Figment Exchange has a commission rate exceeding 10%, which could contribute to client dissatisfaction.

Moreover, Binance displayed negative dynamics, losing 57,600 stakers and securing third in the overall ranking.

Change among platforms for Ethereum staking. Source: Dune

During the same period, the Mantle pool took the lead with a monthly increase in stakeholders amounting to 181,912, even though it holds the 13th position in the overall ranking. This project is relatively young, especially when compared to Lido. It was initially announced in November 2022, and developers only opened access to the mainnet in July 2023.

Many individuals may be familiar with this project by its former name, BitDAO, which underwent a name change in May 2023.