Decentralized finance (DeFi) Lido is under pressure as the staking market on Ethereum matures. Lido market share declined to a record low, falling from 32.3% in 2023 to just 24.4% today.
The shift is occurring as new institutional-grade infrastructure unlocks access to staking and competitors sharpen their game. Ethereum developers have frequently warned that if a single provider controls more than 33%, it could lead to consensus issues.
Rising Competition and Market Diversification
The Ethereum staking ecosystem is maturing. Besides Lido, the market now hosts institutional-focused operators, decentralized community-run protocols, and exchange-backed staking services.
Consequently, Ethereum’s staking model is moving away from concerns about centralization. “There was a big community effort to ensure that Lido did not reach 1/3 of total stake,” said Rocket Pool’s general manager, Darren Langley.
Moreover, Figment has emerged as one of the largest beneficiaries of this rebalancing. Known for serving institutional clients, Figment has seen ETH deposits from funds and asset managers accelerate sharply.
As per Figment, ETH staking demand from its clients doubled after the SEC clarified in May that staking is not a securities activity. Last week, the SEC confirmed that liquid staking participants also need not worry about securities laws.
Institutional Growth Potential
Recently, BlackRock applied to launch an Ethereum ETF with staking. If approved, it would give the end-of-day investors a direct way to get staking rewards for their Ethereum. Such an advancement will also attract institutional money to Lido and key parties. This will resurrect Lido’s growth and trigger high demand for LDO tokens.
Figment CEO Lorien Gabel reflected the sector’s momentum, stating, “Now that the largest institutions in the world are embracing digital assets, we’re busier than ever onboarding them.”
The declining market share for Lido indicates a stronger and more competitive staking ecosystem for Ethereum. This drop, while it might seem like a blow, might also be the occasion for institutional adoption and concrete regulations to come to further growth.
Also Read: Norway Wealth Fund’s Bitcoin Exposure Grows 192.7% to $862M
