What Lido’s plodding user count means for its future

• The YTD growth rate of RocketPool’s rETH was nearly three times that of Lido’s stETH.
• The growth in new token holders of stETH has stayed flat ever since withdrawals were enabled by Lido.

Lido Finance [LDO] remained head and shoulders above its competitors in the expanding liquid staking landscape. The supply of its liquid staking token (LST), Lido Staked ETH [stETH] was nearly 16 times more than the closest rival, RocketPool’s rETH, according to data by on-chain analysis firm Glassnode.

Source: Glassnode

Realistic or not, here’s LDO’s market cap in BTC’s terms

While Lido’s domination remained unrivalled, other players have slowly enhanced their game.

Rivals see better growth

As indicated in the graph above, the circulating supply of rETH, the second-largest LST in the market, has grown at a much faster rate than stETH. While Lido’s liquid staking derivative increased by 54% on a year-to-date (YTD) basis, rETH’s has grown by 157%, nearly three times more than the former.

Moreover, additional data from Glassnode revealed that increased demand for stETH didn’t translate into an increase in new token holders. Ever since Lido enabled withdrawal of locked ETH in mid-May, the growth in new addresses has stayed flat.

Source: Glassnode

LSTs of other protocols like RocketPool and FRAX witnessed a marked increase in new users, following the Shanghai Upgrade.

These findings indicated that most of the new deposits made by LDO were from existing stETH holders. This cohort was probably testing out withdrawals in the initial phase and, after being satisfied with the process, went on to restake ETH.

This could also be explained by analyzing the trajectory of stETH token holders’ balance. After the withdrawals were enabled on Lido, there was a sharp dip in the stETH holdings, meaning that users were redeeming their LST for ETH. However, as the dust settled, the average token balance surged to 51.

Source: Glassnode

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Rise of liquid staking derivatives

As a category, Liquid staking protocols extended their dominance after Shapella and outperformed other staking options like centralized exchanges (CEX) and staking pools.

Data from Dune highlighted that the contribution of liquid staking entities to ETH staking increased from 31% to 37% since Shapella. Conversely, the amount of ETH staked through CEXs has plunged from 34% to 20% in the same time period.

Source: Dune