Lido’s former dominance at the Ethereum staking market fell to its lowest low in three years, with its share dropping to 25%.
This drop coincides with the long-term pituitary gland of Steth, a liquid staking token issued by the platform.
Lido’s market share declines
On July 24th, Tom Wan, head of data at Entropy Advisors, cited data from Dune Analytics, showing Lido’s Staked ETH volume has dropped by 5% over the past six months. This marks the lowest share since March 2022.
At the same time, the platform withdrawal queue has skyrocketed to the highest level since the withdrawal feature was enabled, with over 235,000 Steth waiting for the exit.
Growing exit pressure follows significant withdrawals from several key players, including investment companies such as Justin Sun and Abraxas Capital, as well as staking platforms such as ether.fi.
Despite important withdrawal requests, Lido remains the largest Ethereum staking provider with a large margin. It currently has over 9 million ETHs and has won closest competitors, Binance and Coinbase, which is a major successor.
According to its website, the platform still offers an annual rate of 2.8% (APR), reporting more than $33 billion in total locked values.
Steth Depeg
The recession in the market position of Lido coincides with Steth’s long-term pituitary gland from ETH.
Blockchain analytics platform GlassNode has made popular Levareval’s staking strategy unprofitable, due to this being driven by an increase in Weth borrowing rate at Aave. As a result, users began to unravel their position, increasing the selling pressure on ETH, and weakening the STETH/ETH pegs.
The company also noted that the growing validator exit queue makes the situation even worse, making arbitrary efficient and slowing down PEG recovery.
Aavechan co-founder Mark Zeller pointed out that he has repeatedly made major ETH movements, particularly from whales like Justin Sun, as a factor that boosts Aave utilization.
He said these withdrawals have skyrocketed Aave utilization, making borrowings prohibitively expensive and accelerated the understanding of their leveraged location.
The pegs broke sharply for a while, but Zeller noted that the borrowing rate was normalized and that he expected stability to return.