• Ethereum-based liquid staking protocols have seen a surge in total value locked (TVL) over the past month, with Lido, Coinbase and Rocket Pool all recording gains.
• Liquid staking allows users to stake their ETH on the Beacon chain while maintaining the liquidity of their tokens.
• Market and price action analysis shows that Lido has been more volatile than Rocket Pool, registering 17% gain over the last 7 days.
Overview of Liquid Staking
The liquid staking industry has been thriving on the Ethereum (ETH) network recently since the introduction of the Beacon chain. Liquid staking is an automated process that allows users to stake their ETH on the Beacon chain, a proof of stake blockchain. This process provides rewards for users while allowing them to maintain liquidity by moving their assets around whilst still earning rewards.
As of Feb. 9, 2021, the total value locked (TVL) in three top Ethereum-based liquid staking protocols had risen above $11b, with Lido (LDO), Coinbase (COIN), and Rocket Pool (RPL) all recording gains in the 20-40% range over the past month, according to DeFi LIama. Lido has emerged as leader with around $8.39b in TVL , while Coinbase’s wrapped ETH totaled $1.77b, a 24% increase from last month and Rocket Pool and Frax Ether have seen increases of 40% and 97%, respectively over this period..
Price Action Analysis
Coinbase and Rocket Pool have made news due to their involvement with Oracle DAOs recently . On CoinMarketCap we see that Lido has been more volatile than Rocket pool registering 17% gain over last 7 days taking its market cap at $ 2 .27 billion making it 30th largest crypto by market cap .
According to Gnosis co-founder Martin Köppelmann’s survey , Lido currently controls 27 .5 % of staking , while Coinbase is in second place at 14 .5%. This has sparked debate about whether Ethereum is becoming too centralized , with some bitcoin maximalists arguing that this proves so .
Liquidity staking platforms are leading the surge in Ethereum TVLs lately due to its ability to support liquid staking which enables users to move assets around while still receiving rewards similar to traditional staking methodologies but with added benefit of liquidity maintenance enhancing overall liquidity . The performance analysis shows that Lido has been more volatile than other protocols like Rocket pool but there has also been debate regarding centralization of ethereum network due to concentration of few protocols controlling majority TVLs