Lido’s declining dominance as Figment captures institutional interest

Lido lost 285,000 ETH in the last month. Figment added 344,000 ETH to its holdings during that same period. This shift brings Lido’s market share to 24.4%, which falls far below the 32.3% peak recorded in late 2023. The protocol now sits below the 33% threshold that researchers and Ethereum core developers previously labeled as a point of dangerous concentration. I view this decline as a sign of a maturing, diversified staking ecosystem. While Lido remains the largest liquid staking protocol, its dominance faces constant pressure from specialized providers.

The market no longer relies on a single provider to maintain network health. You already know that Lido’s share once neared the 33% mark that experts labeled dangerous for consensus. This diversification includes institutional-grade operators, community-run decentralized protocols, and exchange-hosted staking products. The shift in capital away from Lido does not necessarily mean capital is leaving Ethereum, but rather that it is moving to different service models.

Regulatory shifts drive institutional flows to Figment

Regulatory clarity in 2026 changed how institutions approach Ethereum. The SEC and CFTC issued a joint interpretive release on March 17, 2026, which confirmed that protocol staking does not constitute a securities transaction and removed the primary legal barriers that had previously prevented many large institutions from participating. This decision helped Figment grow its share to 4.5% of all staked ETH. Figment’s institutional client demand doubled after the SEC provided additional clarity in May.

The institutional segment grew to 35.3% of all staking during the first half of 2026. This momentum favors infrastructure providers like Figment, which manages over 250 institutional clients. The competitive landscape for this capital includes Bitmine, Coinbase, and Binance, which hold 11.5%, 10.9%, and 7.9% of the market respectively. Bitmine alone holds about 5.6 million ETH through its MAVAN platform. Will the expansion of institutional providers like Figment eventually drive Lido below 20% market share?

Lido faces financial pressure and buyback failures

Lido’s automated buyback mechanism, NEST, skipped a purchase on September 9. The contract recorded a negative cumulative budget of approximately $517,024 at that time. The mechanism requires a surplus before it restarts allocations to LDO holders. I find the failure of the NEST buyback to be a blunt indicator of the protocol’s inability to distribute value during market downturns. Lido’s H1 2026 report shows $27.51 million in gross staking revenue. However, the decline in ETH prices reduced net staking revenue to $15.71 million for the same period.

Lido’s treasury holds $137.89 million, but the LDO token price tells a different story. LDO trades at $0.44, which sits 94% below its August 2021 all-time high of $7.30. The protocol faces a challenging environment as ETH prices fluctuate. In early 2026, the DAO projected revenue that assumed ETH was at $2,712, but the price dropped to $2,020 by late February. This volatility puts immense pressure on the DAO’s ability to maintain its planned spending.

Competition scales across the staking landscape

The liquid staking market holds 14.41 million ETH across 33 tracked protocols, with a combined value of roughly $25.66 billion. Lido remains the leader in this category, but its lead is narrowing. Binance manages 3.7 million ETH in pooled staking, and Coinbase holds close to 2.9 million ETH. Other players like ether.fi, which leads in liquid restaking, and Rocket Pool, which holds 529,406 ETH, continue to capture different segments of the market.

The total amount of staked ETH reached 39.67 million by mid-June 2026. This total includes 1.24 million active validators, an increase of 96,000 nodes since January. Most of this capital came from institutional and corporate buyers who prefer locking ETH for yield. The current validator entry queue runs at roughly 50 days, which is a change from the peak waits seen earlier this year. Base consensus yields sit near 2.7%, while MEV and priority fees lift total returns to between 3.1% and 3.3%. Lido’s era of uncontested dominance is over.