Lido Finance, Ethereum’s leading decentralized finance (DeFi) protocol, has achieved a significant milestone by reaching one million validators.
Liquid staking protocols, exemplified by Lido Finance, are transforming the landscape of staking by democratizing access for retail users with limited capital. Previously requiring 32 Ether (ETH) to run a validator node on Ethereum, liquid staking protocols like Lido now provide an alternative avenue.
Lido Finance holds a substantial portion, accounting for 28.5%, of staked Ether, with an additional 13.6% staked through the Coinbase exchange. This collective stake represents over 27% of the total Ether supply, demonstrating the protocol’s significant presence in the market.
The surge in DeFi Total Value Locked (TVL), from $36 billion to a peak of $97 billion, is largely attributed to the rise of liquid staking protocols like Lido. These protocols offer users the flexibility to stake their Ether while retaining liquidity through assets like Lido Staked ETH (stETH), enabling participation in various DeFi protocols.
While Lido Finance commands a substantial share of the cumulative TVL in liquid staking protocols, concerns have been raised about its growing dominance.
Ethereum co-founder Vitalik Buterin has cautioned against potential centralization risks associated with Lido’s dominance, emphasizing the importance of robust governance mechanisms to mitigate such risks.
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