Lido Finance, the leading decentralized finance (DeFi) protocol on the Ethereum network, has achieved a significant milestone by reaching one million validators. This announcement was made on April 29 through a post on the X platform. Lido Finance has emerged as the largest liquid staking protocol on Ethereum, making staking more accessible to retail users with limited capital. Previously, these users would have needed to possess 32 Ether (ETH) to run their own validator nodes on the Ethereum network.
Currently, Lido Finance holds the majority share of staked Ether at 28.5%, while 13.6% is staked through the Coinbase exchange, as reported by Dune data. This means that over 27% of the entire Ether supply is being staked. Liquid staking protocols such as Lido have experienced rapid growth due to the liquidity benefits they offer to users. When users stake their Ether with Lido, they receive the protocol’s Lido Staked ETH (stETH) in return, which can be utilized in other DeFi protocols. This is in contrast to regular staking, where the staked Ether tokens remain locked up and unusable for the duration of the staking period.
The rise of liquid staking protocols like Lido has contributed significantly to the growth of the total value locked (TVL) in DeFi protocols. In the first quarter of 2024, the TVL in DeFi protocols reached a peak of $97 billion, compared to a low of $36 billion in the fourth quarter of 2023. Currently, the total DeFi TVL stands at $92.32 billion, according to DefiLlama.
Messari, an on-chain intelligence provider, attributes this impressive growth in DeFi TVL, which has increased by 65.6% quarter-on-quarter, largely to liquid staking protocols like Lido. Cumulatively, liquid staking protocols have amassed over $47.7 billion in TVL, with Lido being the leading protocol with over $29.9 billion. Rocket Pool follows in second place with $3.86 billion in TVL.
Liquid staking protocols continue to dominate the DeFi space, accounting for $47.6 billion in combined TVL across 164 protocols. Lending comes in second place with $30.7 billion in TVL, followed by cross-chain bridges with $21.8 billion in combined TVL.
Despite its success, Lido’s growing dominance has raised concerns among notable crypto founders. Ethereum co-founder Vitalik Buterin, in a blog post from September 2023, highlighted the potential risks of centralization associated with Lido. However, the protocol’s growth and achievements in the DeFi landscape remain significant and continue to fuel optimism among industry experts and investors.