4. Outlook

Per DefiLlama, Liquid Staking protocols represent a combined TVL of $14.13b with Dexes and lending protocols numbers one and two, respectively. However, the number of liquid staking protocols lag at 70 while Dexes sit at 695 and lending protocols at 211. Liquid staking is still very clearly in the infancy stages of both adoption and innovation.

Lido, the leading liquid staking protocol represents approximately 65% of the entire liquid staking TVL. We talk about the dangers of centralization and over-concentration of staked assets in allowing the majority (over 50%) of this liquidity to be in the hands of a single protocol in section 6.

While LSD will be available on multiple chains, the primary focus is on Ethereum. With the Shanghai upgrade coming, the demand for staking Ethereum will skyrocket as the ability to stake and unstake freely becomes more readily available.

To compound this coming demand, liquid staking protocols provide a liquidity solution to staking that makes it almost impossible to justify NOT staking your ETH. Why would I not stake Ethereum for an 8% APR if I still retain the liquidity to trade with? There is almost zero reason to not earn passive income on your liquidity while you explore the various DEFI opportunities to earn on. The liquid staking boom is in its initial stages. Many experienced and weathered veterans in our space are just now learning about LSD’s and the power they hold to transform DEFI and staking technologies. As we evolve as a DeFi solution, things will only continue to grow and improve. We are all early here.