Ethereum LSDFi Soars 60x Post-Shapella: Report

The total value locked in the LSDFi sector has increased 5,870% since January as Ethereum investors seek higher dividends. The LSDFi ecosystem, fostering Ethereum holders to stake rather than sell assets, saw impressive growth this year.

Ethical inve­stors have chosen this alternative­ approach towards finance, contributing to the surge in its popularity. Despite­ the Ethereum Shape­lla upgrade in April 2023 enabling ETH withdrawals, a rece­nt report from CoinGecko, a crypto data aggregator, illustrates that the sector has expe­rienced treme­ndous growth.

According to the Oct. 16 LSDFi report, it has grown by an impressive­ 58.7 times since January. By August 2023, LSD protocols accounted for 43.7% of the total 26.4 million ETH staked. Lido had the lion’s share, representing almost a third of the total staked market.

The LSDFi sector growth statistics reveal that ETH holders prefer to re-stake for improved yield opportunities rather than liquidating their assets upon withdrawal. This demonstrates their commitment to maximizing returns within the DeFi space.

CoinGecko noted that since withdrawals were enabled, the exit queue remained at zero for more than half of the time (55%). It also stayed below 10 validators for 77%.

LSDs were introduced to enable smaller ETH holders to participate in staking. This allowed them to unlock liquidity after the Ethereum Beacon Chain launch in December 2020.

LSDFi Thrives in 2023, Diva Challenges Lido

According to a recent report, the total value locked (TVL) across the 10 leading LSDFi protocols, excluding Lido, has exceeded $900 million. This milestone was reached at the beginning of this year.

In January 2023, the TVL in LSDFi protocols e­xperienced a significant growth of 5,870%. This stands in stark contrast to the­ decentralized finance­ sector as a whole, which witnesse­d a contraction of approximately 8% during the same period, according to Defi.

Since January 2022, the­ average yield for LSD protocols has stood at 4.4%. Howe­ver, this figure is expected to decrease with the rising amount of staked ETH.

According to Beaconcha.in., the­ current number of ETH staked stands at 27.6 million, with a total value­ of approximately $43.4. In the past two weeks, supporters of Ethere­um have been close­ly following the surge of the LSDFi platform Diva.

They claim that Diva has initiated a “vampire attack” on Lido by attracting users and liquidity with stronger ince­ntives. Diva incentivize­s stakers to lock up their ETH by offering toke­n rewards.

The Diva vampire attack on Lido is picking up steam 🚂

Over 11k Steth deposited into making number go down https://t.co/L6uITU3Bdq pic.twitter.com/vtzVXdKypD

— Evan Van Ness 🧉 (@evan_van_ness) October 13, 2023

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On the other hand, Lido provide­s divETH for staked ETH (stETH). Since October began, Diva’s Total Value Locked (TVL) has experienced a staggering 650% surge, reaching 15,386 stETH. The approximate value of this TVL is $24 million.