EigenLayer removes caps, sees record $157 million inflow as Lido dominance dips EigenLayer removes caps, sees record $157 million inflow as Lido dominance dips
Lido's Ethereum staking dominance wanes, drops under 30% due to inflows into restaking protocols.
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Updated: Apr. 17, 2024 at 12:36 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Ethereum restaking protocol EigenLayer saw inflows of approximately $157 million in Lido’s staked ETH during the last 24 hours, marking the digital asset’s highest inflow on the platform since February.
Notably, this significant inflow into EigenLayer comes at a time when Lido’s share of the Ethereum staking market has dropped below 30% due to outflows into restaking protocols.
LST cap removal
On April 16, EigenLayer announced the removal of caps on all ETH liquid staking tokens (LST) and unpaused restaking deposits.
The removal of LST caps signifies a pivotal phase for EigenLayer’s ecosystem as it strives to foster an open market for innovation and grants users unrestricted access to all LST pools on its platform. Previously, EigenLayer had imposed caps to bolster decentralization and mitigate the risk of dominance by any single token.
These caps were intermittently lifted over the past year before the recent mainnet launch. However, the decision to remove caps is accompanied by a governance participation limit of 33% for any liquid-staked token to uphold neutrality and decentralization.
Despite recent market volatility, EigenLayer remains the dominant protocol within the restaking sector, controlling 99% of the market. Data from DeFillama shows that there are currently approximately 4 million ETH on the platforms, worth more than $12.2 billion.
Restaking eats into Lido’s dominance
A Dune Analytics dashboard curated by Dragonfly analyst Hildobby reveals that Lido experienced the largest outflow among staking platforms in the past month, totaling nearly 400,000 ETH, reducing its market share to 28.87%.
During the same period, liquid restaking protocols Ether.fi and Renzo attracted more than 700,000 ETH to their platforms.
Market observers explained that Lido’s market share decline was due to the heightened competition within the liquid staking landscape. Ethereum educator Anthony Sassano said:
“The best way to stop Lido from growing and reduce its market share is to increase competition in the staking space, which we have now done! The Ethereum staking ecosystem has never been healthier and I’m looking forward to seeing an even more decentralized staking ecosystem as time goes on.”
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Lido Staked ETH
$3,603.48
stETH is a token that represents staked ether in Lido, combining the value of initial deposit + staking rewards.
