Lido maintains liquid staking lead despite market share erosion

Liquid staking dominance and market shifts

Lido manages 9.13 million ETH as of mid-2026, and the protocol provides a total value locked between $23.6 billion and $23.8 billion as it fights for dominance in the liquid staking market. This dominance remains high, although the protocol’s market share fell to 21.18% in the first half of 2026 from 32.3% in late 2023. Competitors like Figment gained 344,000 ETH in the last month, while Rocket Pool’s rETH supply grew three times faster than Lido’s since the start of the year. Users still prefer stETH for its deep liquidity and integration with over 100 protocols. You should watch how these inflows change your own yield expectations.

Lido maintains a large installed base of users despite a shrinking share of the total liquid staking market. The protocol manages a treasury that held $88.3 million at the end of H1 2026, though this dropped from $157.5 million earlier in the year. This decline primarily resulted from the ETH price falling 47% during the first half of 2026. The LDO supply fell 1.8% since January, moving from 895.5 million to 879.1 million. Although the protocol captured 21.18% of all staked ETH in the first half of 2026, Lido Labs reduced its workforce by 15% to maintain long-term sustainability following a 23% revenue decline in 2025.

Metric	Value
Lido H1 2026 Net Revenue	$15.9 million
Staking Reward Fee	10%
Max Reported APR Sanity Check	27%
stETH/ETH Price Spread	$2.35

Staking yields face pressure from EIP-8363

Lido clearly provides the best option for those wanting simple ETH exposure without managing validator hardware. Staking rewards face downward pressure as the percentage of ETH staked increases. The EIP-8363 proposal aims to taper validator rewards toward zero if the staking ratio reaches 50%. This could compress yields from 2.6% to 1.2%. Lido reported $15.9 million in net DAO revenue for H1 2026. This revenue arrived even as the ETH price dropped from $2,969 on January 1 to $1,569 on June 30. Capital often shifts from simple liquid staking to higher-risk products. On Aave, investors use stETH as collateral to borrow ETH, which amplifies returns through leveraged staking strategies. Lido collects a 10% fee from staking rewards. The protocol distributes 90% of these rewards to stakers, while allocating 5% to node operators and 5% to the treasury.

However, the protocol faces competition from restaking platforms like Ether.Fi, which capture capital through protocol token subsidies. Lido’s developers also focused on dual governance and community staking to address centralization concerns. These moves aimed to improve the protocol image but failed to drive growth. The protocol also experimented with the LDO Accumulation Program, which deployed 2,320 stETH and returned 14.8 million LDO to the treasury. Will Lido successfully pivot toward institutional users to recover its lost market share?

stETH liquidity and concentration risks

Liquidity for stETH in decentralized exchanges fell after the Ethereum Shapella upgrade. The stETH-ETH Curve pool dropped from $800 million to $274 million. This contraction creates risk if investors sell stETH for ETH during market volatility. If the Ethereum validator exit queue congests, stETH holders must use secondary market liquidity. Analyst Riyad Carey notes that current levels might not support the $3 billion in leveraged stETH positions on Aave. This could trigger mass liquidations if stETH loses its peg.

Concentration remains a concern as Lido’s share fell to 21.18% in mid-2026 from 32.3% in late 2023. The 33% consensus threshold remains a point of discussion among Ethereum developers because exceeding it could allow a single provider to influence consensus. Technical failures also pose risks, as seen in the May 2025 incident where one of nine oracle keys associated with Chorus One was compromised. The KelpDAO bridge exploit in April 2026 left RSETH underbacked, though the core stETH system remained unaffected. Users should evaluate the risk of oracle failure, validator outages, or smart contract vulnerabilities before committing capital.