Liquid staking protocols, which allow users to stake their assets on decentralized networks while still having liquid access to them, are gaining popularity in the crypto space. These protocols have seen significant growth in total value locked (TVL), and experts predict that their TVL could soon surpass that of decentralized exchanges (DEXs). This would signify a major shift in the DeFi landscape, as liquid staking protocols would become a dominant force in the industry. With more investors opting for staking over trading, liquid staking protocols are quickly becoming a go-to option for those looking to earn passive income on their crypto assets.
Liquid Staking Protocols Could Overtake DEXs in Total Value Locked
According to data from DeFillama, the total value of assets locked (TVL) on liquid staking protocols is quickly approaching that of decentralized exchanges (DEXs). As of now, the 81 liquid staking protocols tracked by DeFillama have a cumulative TVL of $19.31 billion, with Lido being the dominant player in the sector. Meanwhile, the total value of assets locked on the 799 DEX protocols sits at $19.48 billion, according to DeFillama data.
Experts believe that a “flippening” could occur any day now, with liquid staking protocols potentially overtaking DEXs in terms of TVL. Liquid staking protocols allow users to earn staking rewards while also providing liquidity for other crypto-based activities. Examples of these protocols include Lido, Frax Ether, and Rocket Pool.
Earlier this year, liquid staking protocols became the second-largest DeFi category when it usurped the lending protocols category. At the time, the liquid staking protocols enjoyed enormous interest due to the anticipated Shapella upgrade.
Since the Shappella upgrade, the top 10 liquid staking protocols have seen their TVL grow by an average of 10% in the last seven days. For context, the number of Staked Ethereum on Lido (LDO) crossed 6 million, worth $12.93 billion on April 18, according to DeFillama data.
CryptoSlate’s data corroborates the increasing value of liquid staking platforms, with the market cap of the protocols in the sector growing to $4.44 billion in the last seven days. Blockchain analytical firm Nansen’s dashboard showed that more Ethereum is being deposited than withdrawn for the first time since the network completed the Shapella upgrade. According to the dashboard, over 85,000 ETH was deposited in the last 24 hours, while less than 22,000 ETH were withdrawn during the same period.
Meanwhile, blockchain analyst Lookonchain reported that some addresses withdrawing their staked ETH were immediately re-staking them. The on-chain sleuth reported two whales that staked over 50,000 ETH tokens via the liquid staking protocol, Agility.
In conclusion, liquid staking protocols represent a major growth opportunity for DeFi users. With TVL rapidly approaching that of DEXs, it is clear that these protocols provide a unique value proposition and offer strong potential for growth in the coming months. As always, it is important to conduct appropriate research and due diligence before investing in any DeFi protocol.