Ethereum’s liquid staking derivatives, or LSDs, have become one of the most important segments of decentralized finance since emerging in 2020. By the first week of October 2023, 23 liquid staking platforms collectively held 12.4 million ETH, valued at more than $20 billion. The scale of that growth is notable on its own, but the market structure is even more striking: the top three protocols — Lido, Coinbase’s Wrapped ETH platform, and Rocket Pool — controlled a combined 11.041 million ETH, representing 89.18% of the total ether locked across the sector.
The numbers underscore how quickly liquid staking has gone from a niche utility to core Ethereum infrastructure. LSD protocols allow users to stake ETH while receiving a tokenized representation of their deposit, preserving onchain liquidity and enabling participation in other DeFi activities. That model has broadened access to staking rewards and removed some of the inflexibility associated with traditional locked staking.
Lido Remains the Dominant Force
Lido Finance is by far the largest player in the category. Founded in 2020, the protocol held about 8.79 million ETH at the time of the report, worth roughly $14.55 billion. That gave Lido a commanding 70.96% share of the entire liquid staking market. In return for deposited ETH, users receive stETH, the protocol’s liquid staking token.
That dominance has also made stETH one of the most significant assets in crypto by market value. According to the report, the token ranked among the top ten crypto assets when compared with other major market capitalizations. Onchain activity also reflects broad usage. There were 269,080 unique addresses holding stETH, while total transfer count had reached around 1.15 million. Circulating supply stood at approximately 8.79 million stETH.
At the same time, the token’s ownership distribution reveals meaningful concentration. The top 100 holders collectively owned 69.26% of the total stETH supply, equal to roughly 6,088,042.02 tokens. Yield has been another key factor behind its adoption. A Coingecko study published on September 29, 2023, found that stETH offered an average yield of 4.6%.
Coinbase Holds the Number Two Position
Coinbase’s Wrapped ETH product ranked second among all liquid staking projects, with approximately 1.3 million ETH under management, worth around $2.26 billion. That translated to a market share of 10.48%. The platform’s token, cbETH, had a circulating supply of 1,297,211 and was held across 40,653 unique addresses.
Since launch, cbETH had recorded 210,532 transactions, showing steady but far smaller network activity than stETH. Ownership concentration, however, was much higher. The top 100 holders controlled 96.43% of circulating cbETH, equivalent to roughly 1,250,865.13 tokens. The report noted that cbETH’s average yield remained above 3% in August 2023 and had exceeded 4% several times over the previous year.
These figures suggest that while Coinbase has built a sizable foothold in liquid staking, its token distribution is considerably more concentrated than Lido’s. That distinction may matter in broader discussions around decentralization, market structure, and the role of custodial brands inside Ethereum’s staking economy.
Rocket Pool Rounds Out the Top Three
Rocket Pool came in third, holding 951,264 ETH, which gave it a 7.68% share of the LSD market. Users who stake ETH through Rocket Pool receive rETH, a liquid staking token designed to represent their staked position. At the time of the report, total rETH supply stood at 529,872.
Compared with Lido and Coinbase, Rocket Pool’s holder base was smaller but still substantial. The token was held by 18,784 addresses and had recorded 197,928 transactions. Concentration among the top holders was lower than Coinbase’s but still significant: the top 100 wallets held 67.91% of the rETH supply, equal to around 359,823.38 tokens.
Rocket Pool’s position is especially notable because it is often viewed as an alternative more aligned with decentralized participation. Even so, the market data in the report shows that it remains much smaller than Lido and trails Coinbase by a visible margin in assets held.
Rapid Growth Across the Sector
The broader liquid staking market was still expanding rapidly at the time of publication. Roughly one week before the report, the total amount of ETH held by LSD protocols crossed the 12 million ETH threshold. Over a period of just five days, the sector added another 370,000 ETH. That pace of growth illustrates how strongly users were responding to the combination of staking yield and retained liquidity.
Below the top three, other protocols such as Binance Staked Ether, Frax Staked Ether, and Stakewise also held meaningful amounts of ETH. While none approached the scale of Lido, Coinbase, or Rocket Pool, their presence suggests the market is broader than the headline concentration figures alone might imply.
Research cited in the article from Coingecko found that the top eight LSDs had generated an average annual percentage yield of 4.4% APY since January 2022. In practical terms, that kind of return profile helps explain why liquid staking has become an attractive route for ETH holders seeking passive income without fully sacrificing capital mobility.
Utility, Efficiency, and the Centralization Debate
Liquid staking has clear user benefits. It lowers barriers to entry, allows participation without minimum staking requirements associated with direct validator operation, and unlocks composability across DeFi. Users can earn staking rewards while continuing to deploy their derivative tokens in lending, trading, or collateral-based strategies.
But the same success has fueled criticism. One of the main concerns raised by skeptics is that LSD growth may concentrate too much ETH supply and validator influence in a small number of protocols or service providers. The market shares reported here make that argument difficult to ignore. When three platforms control 89.18% of the liquid staking market, questions naturally emerge about governance power, operational risk, and the potential impact on Ethereum’s validator diversity.
Supporters of LSDs offer a different interpretation. They argue that liquid staking can improve network security and decentralization by increasing participation in staking overall and by making validator exposure more accessible to a wider range of users. From that perspective, LSDs do not necessarily centralize Ethereum; instead, they provide infrastructure that helps more capital secure the network.
The reality may lie somewhere in between. The sector’s expansion demonstrates strong product-market fit, but its concentration means that debates around decentralization will remain central as adoption continues. Whether future growth reinforces the dominance of current leaders or allows smaller protocols to capture more share will be one of the most important themes to watch in Ethereum staking.
For now, the data paints a clear picture: liquid staking has become a multibillion-dollar pillar of Ethereum’s economy, and Lido, Coinbase, and Rocket Pool sit firmly at the center of it.