Does Ethereum Still Have a Cartel? Glassnode Unpacks Skyrocketing Staking

Ethereum (ETH) staking has been flying high over the last several months after its latest upgrade, dubbed Shanghai, and the network has also seen the continued dominance of its so-called cartel, Lido Finance, according to the latest report by blockchain intelligence firm Glassnode. 

Some observers thought that the Shanghai upgrade in April—which allowed users to un-stake and withdraw their tokens—would mean a rush for the exits, Glassnode analysis shows that the opposite has happened. 

According to Glassnode, daily staking deposits after Shanghai increased from 460 to 8,108 daily, registering an impressive spike on June 2, which saw 13,595 deposits. Last month, deposits for Ethereum averaged 2,267 a day.

The biggest winner continues to be the aforementioned Lido Finance, which has sparked conspicuous conversations on Crypto Twitter due to its outsized footprint in the network’s staking pools–and the dangers that kind of centralization poses.

Liquid staking refers to depositing Ethereum in a protocol that then pools it with other user deposits and then stakes the ETH on their behalf. In return, users get another token representing their staked position, which accumulates its own rewards. In Lido’s case, users receive Staked Ethereum, or stETH.

Last month, controversy broke out when many in the community–including the Ethereum Foundation–protested that Lido’s pools were becoming too big. 

Some called for action, but since then, little has changed.

Although Lido suffered a momentary drop in its size, following the upgrade, it quickly bounced back, reaching a new all-time high of 7.49 million stETH. This number eclipses the second largest pool, RocketPool (rETH) which holds 461,000 stETH, by an astounding 16 times. 

The figures also show that the supply of rETH has been growing 300% faster compared to stETH this year. Glassnode also notes that although Lido has the highest supply, most liquidity, and enjoys the top network effects, it has not seen an uptick in new users. 

Since the upgrade, there has also been a shift in stETH that flows through DeFi protocols. The token has a shrinking footprint in certain DEX’s liquidity pools and registered a sizable drop in its largest pool (stETH-ETH Curve Pool)—falling by 39% in total value locked, reading levels not seen since before the Terra-Luna collapse. On the other hand, it has risen in collateral usage in lending protocols, pointing to a possible staking yield maximization strategy by investors.

With staking on the rise—and notwithstanding the yearly trend in RocketPool’s favor or Lido’s reduced presence in some pockets of DeFi—Ethereum’s cartel, for now, carries on.