Liquid staking surpasses declining market trends as Lido expansion drives $20 billion in total value locked.

The overall value of assets locked (TVL) in liquid staking initiatives has continued to rise despite the prevailing negative sentiment in the market.

Data from DeFillama indicates a significant increase in the TVL of this category, which has approached nearly $20 billion over the last year. This growth has notably surpassed that of other areas within decentralized finance, such as lending and decentralized exchanges, during the same period.

Liquid staking protocols like Lido (LDO), Frax Ether (FXS), and Rocket Pool (RPL) provide users with the distinct advantage of earning staking rewards while maintaining liquidity for other cryptocurrency activities. The expansion of this sector is primarily attributed to the Ethereum (ETH) Shanghai upgrade, which facilitated easier withdrawals of staked ETH for participants.

This upgrade rekindled interest within the cryptocurrency community for these protocols. For reference, Nansen’s Ethereum Shanghai dashboard illustrates a pattern of ETH staking deposits exceeding withdrawals since the initiation of the process. These deposits are heavily concentrated on liquid staking platforms, with Lido leading the market.

Staked Ethereum Deposits and Withdrawals. (Source: Nansen)

Additionally, the recent regulatory measures in the United States aimed at centralized staking service providers such as Kraken have afforded liquid staking protocols a notable edge over their centralized equivalents.

Lido maintains its leading position

Lido exemplifies the robust growth observed in liquid staking. In April 2022, the protocol’s TVL reached a peak of $20.32 billion, according to DeFillama data. However, it encountered a decline following the depeg of Terra’s UST, dropping to $4.51 billion.

This downturn was significantly influenced by the steep decline in ETH prices during that time. Simultaneously, Lido’s Ether TVL fell from 6.59 million to 4.27 million.

Following this, Lido has seen a revival in its Ether TVL, climbing to an all-time high of 8.63 million.

Source: Lido

However, this impressive increase in ETH TVL has not yet resulted in a corresponding rise in its dollar TVL, mainly due to the current price of ETH. At present, ETH is trading at $1,623, reflecting an 11% decline over the last 30 days.

In the meantime, other liquid staking protocols, such as Rocket Pool and Frax Ether, have also experienced significant growth in their TVL during this timeframe.

The post Liquid staking outperforms bearish market as Lido growth fuels $20B TVL appeared first on CryptoSlate.