Since 2020, liquid staking applications on the Ethereum blockchain have experienced steady growth. By the first week of October 2023, a total of 23 liquid staking derivative (LSD) platforms held 12.4 million ether, valued at over $20 billion. The top three LSD protocols—Lido, Coinbase's Wrapped ETH, and Rocket Pool—dominate with 11.041 million ETH, accounting for a substantial 89.18% share of the total locked ether.
Lido: The Uncontested Leader
Lido Finance, launched in 2020, is the largest LSD holder with 8.79 million ETH ($14.55 billion), representing 70.96% of the entire LSD market. Users receive stETH in exchange for ETH. Currently, stETH has a circulating supply of 8.79 million tokens held across 269,080 unique addresses, with approximately 1.15 million transfers recorded. The top 100 holders collectively own 69.26% of the stETH supply. A CoinGecko study from September 29, 2023, shows stETH offers an average yield of 4.6%.
Coinbase and Rocket Pool Follow
Coinbase's Wrapped ETH platform ranks second, holding 1.3 million ETH valued at $2.26 billion (10.48% market share). Its cbETH token has a circulating supply of 1,297,211, with 40,653 unique addresses and 210,532 transactions. The top 100 holders control 96.43% of cbETH. The average yield of cbETH remained above 3% in August 2023 and has occasionally exceeded 4% over the past year.
Rocket Pool holds 951,264 ETH (7.68% market share) as the third-largest LSD. Users receive rETH tokens, with a total supply of 529,872 rETH, 18,784 holders, and 197,928 transactions. The top 100 holders own 67.91% of rETH.
Centralization Concerns and Debate
Below the top three, platforms like Binance Staked Ether, Frax Staked Ether, and Stakewise also hold substantial amounts. LSDs enable users to stake without minimum requirements while maintaining liquidity, but critics argue they foster centralization of supply and validators. Proponents counter that LSDs enhance Ethereum's decentralization by diversifying the validator set. According to CoinGecko, the top eight LSDs have produced an average APY of 4.4% since January 2022. The liquid staking market continues to expand within DeFi, yet its concentration remains a topic of heated debate.