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Our analysis of the situation
In recent months, the Ethereum staking arena has experienced seismic shifts that have reshaped the dynamics and preferences of investors. According to Tom Wan, a renowned on-chain data researcher and strategist at 21Shares, there has been a noticeable change in the approach towards Ethereum staking, with restaking emerging as the favored method.
Wan’s observations, shared on the social media platform X (formerly Twitter), point to a substantial surge in ETH staking deposits from restaking, skyrocketing from 10% to an impressive 60% since 2024.
Restaking can be achieved through ETH natively restaked or by utilizing a liquid staking token (LST). By staking their ETH, users can secure additional applications called Actively Validated Services (AVS), which yield extra staking rewards.
One noteworthy participant in the staking landscape is EigenLayer, which has solidified its position as the second-largest decentralized finance (DeFi) protocol on the Ethereum network. EigenLayer recently celebrated a significant milestone with the introduction of EigenDA, its data availability Actively Validated Service (AVS), on the mainnet.
As per a research report by Kairos, this release marks the dawn of a new era in restaking, where liquid restaking tokens (LRTs) are poised to dominate restaking practices. Currently, a striking 73% of all deposits on EigenLayer are made through liquid restaking tokens. The report underscores the remarkable growth rate of LRT deposits, which surged by over 13,800% in less than four months, signifying a surge in confidence in EigenLayer’s approach to restaking and contributing to the evolving landscape of Ethereum’s staking.
Moreover, according to Wan, the surge of liquid restaking protocols has led to a decline in the dominance of Lido (LDO), a staking service solution for Solana (SOL), Ethereum, and Terra (LUNA). On the other hand, Etherfi has emerged as the second-largest stETH withdrawer, with a staggering 108,000 stETH withdrawn in the first quarter of 2024. This trend reflects the increasing appeal of liquid restaking protocols, empowering stakers to withdraw and actively utilize their staked assets while still earning rewards.
Wan’s data also indicates a dip in the dominance of centralized exchanges (CEXs) in ETH staking. Since 2024, CEXs have observed their share of staking diminish from 29.7% to 25.8%, marking a noteworthy decrease of 3.7%. As a result, the decentralized staking provider Kiln Finance has surpassed Binance and ascended to become the third-largest entity in terms of ETH staking. With Ether.fi poised to follow suit, it is anticipated to surpass Binance’s position shortly, according to the researcher.
In essence, these developments signify a paradigm shift in the Ethereum staking arena, with restaking methodologies gaining momentum and decentralized protocols such as EigenLayer and Ether.fi challenging the dominance of established players.
As of the time of writing, ETH’s price stands at $3,500, exhibiting a sideways trading pattern over the last 24 hours, maintaining relative stability compared to the previous day.
Image source: Shutterstock, chart source: TradingView.com
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
Image(s) are provided by Unsplash or other free sources. They are illustrative and may not represent the content truly.
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