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Author: Admin | 2025-04-27
Say they are trying to make Ethereum as decentralized as possible by opening staking up to anyone.Despite these ambitions, Ethereum’s PoS Beacon Chain – which is currently running in parallel with the PoW mainnet and will eventually merge with it – has shown that even more organic forms of centralization remain a threat.Liquid staking on LidoIn the early days of the Beacon Chain at the start of 2021, it seemed as if centralized exchanges like Coinbase and Kraken might be poised to dominate Ethereum staking by making it easy for their massive user bases to pool their ether and earn staking rewards.While centralized exchanges are indeed playing a large role in the ETH staking game, the largest staker on Ethereum’s PoS Beacon Chain by far is Lido, a so-called liquid staking pool that has amassed a massive 30% share of all staking activity on Ethereum, according to Etherscan.Lido is the largest depositor in the Beacon Chain staking contract (Etherscan) With over $35 billion staked on the Beacon Chain, how has Lido – a single staking solution – amassed $10 billion in ether?Staking on Ethereum is costly and confusing for most users. Most people don’t have 32 ether (about $90,000) lying around to stake and setting up a node incorrectly (or even with shoddy Wi-Fi) can incur slashing, or the loss of one’s funds.Staked ether is also illiquid. Until the Merge, ether staked on the Beacon Chain will be impossible to unstake, meaning it can’t be sold or used to earn interest via decentralized finance (DeFi).Lido launched in December 2020 to make it easier for anyone to earn rewards for staking. If you give any amount of ether to Lido, the platform will bundle it up with ether belonging to others and hand the full sum (at least 32 ETH) over to one of Lido’s trusted node providers – a service that specializes in setting up validators. This enables you to earn some rewards (around 4% annually) for securing the network without the need for 32 ETH or any special expertise.Lido is called a “liquid” staking solution because it gives out staked ether (stETH) – a 1:1 derivative of ether – to users who stake with the platform. This stETH accrues interest to match staking rewards, and although users will be unable to unstake ether until the Merge, they can sell their stETH back to the market if they’d like to cash out.On top of earning staking rewards, it has become extremely common to use stETH to participate in DeFi activities like lending and borrowing to earn even greater yield.As stETH has grown into a hugely popular DeFi primitive, or building block, more users have flocked to Lido. Although Lido started
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