Liquid Staking Derivatives Add Over 440,000 Ethereum in Two Weeks

Updated: 15 May 2023

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The intensity of liquid staking derivatives has increased exponentially, attracting over 440,000 Ethereum, amounting to about $793 million in two weeks, with Lido leading in total value locked. The growth is a sign of sprouting interest in bringing out the prospects of stakes in Ethereum and quenching the investor’s liquidity demand and revenue.

Liquid Staking Derivatives (LSD) Gaining Momentum

The market has witnessed significant progress, with liquid staking derivatives attracting a noticeable incursion in two weeks, resulting in over 440,000 Ethereum. The influx clearly shows the impending rise of staked Ethereum while focusing on liquidity needs and revenue in a decentralized finance (DeFi) environment.

According to records, by May 12, there were 8,872,715 Ether total value locked, amounting to $16.1 billion, compared to 8,431,605 Ethers locked on April 30. The amount of Ether locked up increased by 5.23% in less than two weeks, marking tremendous growth.

However, despite the marvelous accumulation of over 440,000 Ether, the equivalence of the TVL in the liquidity staking is lower than it was on April 30, following the decrease in the value of Ethereum in the market. On April 30, the value was $16.139 billion compared to the current $16.101 billion, showing a 0.235% loss.

Lido Finance is the leading entity on the total value locked with 74.35%. The company boasts 6.59 million Ethereum out of 8,872,715 Ether, which is already locked as of the time of writing. The second is Coinbase Wrapped Staked Ether, having recorded 1,145,137 of staked Ether.

Additionally, in the second week, Lido saw a 4.87% rise, with Coinbase slumping by 1.47%. Good news for Ethereum staked as Rocket Pool bounced by 5.27%, followed closely by Frax Ether which recorded a 5.21% increase in the past week.

A month’s dimension saw Lido grow by 11.1%, with Coinbase reducing its stake by 3.95%. The biggest gainers were Rocket Pool and Frax, the two companies attracted an increase in staked Ether by 34.37% and 42.55%, respectively. According to projections, Rocket Pool is quickly closing in on Coinbase if the factors remain the same.

Convergence of LSD and DeFi

The high level of adoption shows a close relationship between DeFi and liquid staking, calling for more innovation. Liquid staking derivatives are proving to be an essential tool for realizing the worthiness of staked Ether.

Users can maintain flexibility and liquidity while accessing the goodness of staking by creating derivative products. It allows Ethereum holders to participate in different investment opportunities in the DeFi market without locking up their assets for a long time.

The witnessed surge can also be attributed to increased investor demand for profit and liquidity. While traditional staking exposed users to over-locking assets, thus limiting liquidity, liquid staking derivatives have addressed the existing challenges. It creates a bridge connecting the staked assets with DeFi platforms, giving the investors the liberty to trade, offer liquidity, and lend using staked Ethereum.

Projection of the DeFi and Staking Relationship

Liquidity staking derivatives have signaled considerable growth in the market while encompassing the DeFi network. The potential of staking and DeFi attract users because of their capacity to combine staking benefits with suppleness and liquidity.

There is an increased need for innovative solutions to address these emerging aspects. As DeFi continues to converge with staking, there is an absolute need for further development of decentralized finance and all its products.