Ethereum News
The evolution of Lido liquid staking
From Beacon Chain to market dominance
Lido built its foundation on the Ethereum Beacon Chain in 2020 when the Launchnodes team formed. The protocol provides a way to stake Ethereum without the 32 ETH requirement that traditionally prevented most users from participating in the Proof of Stake consensus layer. At certain market prices, the 32 ETH requirement exceeds $111,921. Lido allows users to deposit any amount of ETH to receive stETH, which acts as a 1:1 receipt for their activity. This liquidity allows users to earn rewards while they use stETH in DeFi protocols like Curve and Aave. In March 2021, the protocol reached a total value locked of $13.98 billion, with Ethereum making up 41% of the total. During that period, the platform supported other blockchains including Terra, Solana, and Kusama. For example, Terra accounted for 56% of the total value locked. Users earned annualized returns between 4.5% and 18% depending on the asset. By 2023, 19.4% of all ETH was locked in staking contracts. You might find it useful to track how these yield profiles change as network demand fluctuates.
Managing infrastructure and governance
The protocol manages its validator set through specialized modules designed to maintain decentralization and efficiency. The Curated Module uses 36 node operators and keeps its allocation below a 1% soft cap. This module shows a balanced distribution with a Gini coefficient of 0.001 and an HHI of 0.0278. To improve fault tolerance, Lido uses Distributed Validator Technology across all modules, with 22,233 validators representing 711,456 ETH running on DVT as of late 2025. This DVT adoption includes 1,100 Obol validators and 7,550 SSV Network validators. The Community Staking Module also grew, adding 377,664 ETH on an annual basis and reaching its 5% stake share limit in December 2025. As of January 1, 2026, 482 applications were evaluated with 345 approved, and 220 operators claimed their ICS status. This framework provides a 6% reward share for the first 16 validators and deposit priority for the first 10 validators. To address governance conflicts, the Lido DAO implemented the Dual Governance mechanism under LIP 28. This mechanism allows stETH holders to use a RageQuit process to block DAO decisions. If stETH holders deposit their tokens into an escrow contract and hit a 10% threshold of total value locked, the protocol blocks the execution of the motion. The organization also reduced its contributor team by 15% to manage costs.
| Feature | Lido Liquid Staking | EigenLayer Restaking |
|---|---|---|
| Primary Asset | stETH | stETH or Native ETH |
| Yield Source | Ethereum Consensus Layer | AVS rewards and Base staking |
| Complexity | Low | High |
| Risk Focus | Validator and Protocol | Slashing and AVS design |
The impact of restaking fragmentation
The rise of EigenLayer introduced a competitive layer through restaking, which allows users to rehypothecate Ethereum’s economic security. This process enables users to support Actively Validated Services and earn rewards. EigenLayer’s total value locked grew from $252 million in December 2024 to $1.74 billion by early 2026, and it reached $20 billion in June. This expansion fueled the growth of liquid restaking tokens, such as ether.fi’s eETH, which reached a $330 million total value locked in early 2026. The market capitalization for these liquid restaking tokens hit $620 million in January 2026. Symbiotic, a protocol developed by Lido co-founders Vasily Shapovalov and Konstantin Lomashuk, also competes in this space. Symbiotic received $5.8 million in seed investment from Paradigm and Cyber Fund and allows the use of stETH as restaked collateral. Symbiotic’s total value locked exceeded $81 million. While Lido provides a simple staking access layer, EigenLayer focuses on yield amplification. This fragmentation forces users to choose between the liquidity of stETH and the capital efficiency of restaking.
The current state of Ethereum staking
Lido maintains a 28% share of the Ethereum network as of October 2026, despite pressure from restaking and exchange-based solutions. Lido’s market share dropped to 24.6%, which marked the lowest point in three years, as competition intensified from rivals like Rocket Pool and integrated staking solutions from major exchanges like Coinbase. To maintain its position, Lido continues to develop products like the Lido Impact Staking platform launched in January 2025. This platform allows users to allocate a percentage of staking rewards to social impact projects like GiveDirectly and Treedom. The protocol also manages its validator efficiency through the Curated Module v2 migration. This upgrade supports Ethereum’s 0x02 withdrawal credentials and allows validators to increase their effective balance to 2,048 ETH. This migration could reduce the total Ethereum validator count by approximately one-third. Within the validator set, the Community Staking Module and the Simple DVT Module make up 2.2% of the total Ethereum stake. Will Lido’s structural improvements in validator diversity offset the ongoing shift toward restaking protocols?
