Lido Finance Hits 1M Validators, Fuels DeFi Growth
Lido Finance has reached one million validators as Ethereum's largest decentralized finance (DeFi) protocol.
Lido Finance, the largest liquidity protocol on Ethereum, announced the milestone in an April 29 X post.
Liquid staking protocols like Lido Finance make it more accessible to retail users with limited capital, who would otherwise need 32 Ether (ETH) to run their own validating nodes on Ethereum.
According to Dune data, Lido Finance holds the majority (28.5%) of Ether shares, with 13.6% held through the Coinbase exchange. More than 27% of Ether's supply is currently in stock.
Liquid staking protocols such as Lido have seen rapid growth in providing liquidity benefits to users. Users who stake Ether with Lido receive the protocol's Lido Staked ETH (stETH) in return, which can be deployed in other DeFi protocols.
With regular stock, stored Ether tokens remain locked and unusable for the duration of the inventory.
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Liquid storage is fueling the rise of DeFi.
Total value in Diffie protocols rose from a low of $36 billion in the first quarter of 2023 to $97 billion in the first quarter of 2024. Total DeFi TVL currently sits at $92.32 billion, according to Defillama.
The 65.6% quarter-on-quarter increase in DeFi TVL growth is largely due to liquidity protocols like Lido, according to on-chain data provider Messari:
“This uptick was driven primarily by asset price appreciation and re-increased liquidity, with Ethereum TVL up nearly 71%.”
Liquid pool protocols have accumulated more than $47.7 billion in TVL, Lido has more than $29.9 billion, and Rocket Pool is in second place with $3.86 billion in TVL, according to Defillama.
Liquid Stake protocols remain the largest protocol category in DeFi, with a combined TVL of $47.6 billion across 164 protocols. Lending ranks second with $30.7 billion in TVL, followed by cross-chain bridging with $21.8 billion in combined TVL.
Prominent crypto founders have previously expressed concern about Lido's growing dominance. Vitalik Buterin, the founder of Ethereum, has previously addressed the potential risk of centralization with Lido in a blog post from September 2023.
Buterin wrote:
“With the DAO approach, if a single token like this is controlled, it turns into a single, attackable management tool that controls all Ethereum validators. Thanks to protocols like Lido, they've implemented safeguards to prevent this, but a single layer of protection may not be enough.”
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