Lido Finance’s Million Validators Drive DeFi Expansion

Lido Finance, the leading decentralized finance (DeFi) protocol on Ethereum, has achieved a significant milestone by reaching one million validators. This achievement was shared by Lido Finance in a recent post on April 29. The protocol has revolutionized staking by making it more accessible to retail users with limited capital, eliminating the need for them to possess 32 Ether (ETH) to run their own validator nodes on the Ethereum network. Currently, Lido Finance accounts for the largest share of staked Ether, with 28.5%, followed by Coinbase exchange with 13.6%, according to data from Dune. Around 27% of the total Ether supply is currently being staked.

The dramatic growth of liquid staking protocols such as Lido can be attributed to the advantages they offer in terms of liquidity. Unlike traditional staking, where the staked tokens remain locked and cannot be utilized during the staking period, users who stake their Ether with Lido receive a protocol-specific token called Lido Staked ETH (stETH). This token can be utilized in various DeFi protocols, allowing users to access the benefits of staking while also enjoying the liquidity of their staked funds.

The rise of liquid staking has played a major role in fueling the expansion of the DeFi sector. The total value locked (TVL) in DeFi protocols has experienced a significant surge, reaching a peak of $97 billion in the first quarter of 2024, according to DefiLlama. Although the current TVL stands at $92.32 billion, this represents a substantial increase from the meager $36 billion recorded in Q4 2023. The exponential growth in TVL, which witnessed a quarter-on-quarter rise of 65.6%, can largely be attributed to the popularity of liquid staking protocols like Lido. Messari, an on-chain intelligence provider, stated that “This uptick was primarily driven by asset price appreciation and liquid restaking, led by Ethereum’s TVL growth of nearly 71%.”

Cumulatively, liquid staking protocols have accumulated a whopping $47.7 billion in TVL, with Lido Finance capturing a lion’s share of $29.9 billion. Rocket Pool secured the second position with $3.86 billion in TVL, as reported by DefiLlama.

Lido Finance’s achievement of one million validators marks a significant milestone in the DeFi industry. By making staking more accessible to retail users, the protocol has opened the doors for a wider user base to participate in staking and benefit from its rewards. As the demand for liquid staking protocols continues to rise, it is expected that the TVL in DeFi will continue its growth trajectory, contributing to the overall development and expansion of the decentralized finance ecosystem.