DeFi remains a cornerstone of the crypto market, contributing over $100 billion in Total Value Locked (TVL) as of May 2025. Notably, Liquid Staking now accounts for $37.49 billion in TVL—nearly 38% of DeFi's market share—according to DefiLlama. Leading this sector is Lido, the largest Liquid Staking Token (LST) protocol with $16.6 billion in TVL and the #1 ranking in DeFi. What drives Lido's success? Let’s explore its core features below.
What is Lido?
Lido (LDO) is a Liquid Staking protocol that allows users to stake assets (e.g., ETH) and receive stETH tokens at a 1:1 ratio, representing their staked ETH. Users retain full control of stETH, enabling participation in DeFi activities like lending, borrowing, or restaking for additional yield. For example:
- User A stakes ETH on Lido, earning stETH (~3.2% APR).
- User A restakes stETH on Renzo to earn ezETH (+3.27% APR).
- ezETH can then be leveraged on Pendle for liquidity provisioning (3.7%–4.3% yield).
Unlike traditional staking (3%–4% APR), Lido unlocks compounded yields through restaking. Launched in 2020, Lido pioneered Ethereum’s Liquid Staking Derivatives (LSD) ecosystem.
Key Problems Solved by Lido
Context: Ethereum’s Staking Challenges
- High Capital Barrier: Validators required 32 ETH (~$23K in Dec 2020).
- Technical Complexity: Running a node demands expertise to avoid slashing penalties.
- Illiquidity: Pre-Merge, staked ETH was locked indefinitely.
Lido emerged as a permissionless solution, democratizing access to staking. Post-Merge (Sept 2022), Ethereum enabled staking withdrawals, fueling LSD growth—with Lido at the forefront.
What is stETH?
stETH is an ERC-20 token mirroring staked ETH via Lido’s smart contracts. It accrues staking rewards and integrates seamlessly with DeFi:
- Liquidity pools (Curve, Uniswap).
- Collateral for lending protocols.
- Restaking (EigenLayer, liquid restaking).
How Does Lido Work?
- Users Stake Assets: ETH is deposited without node operation or minimums.
- Receive stETH: Issued 1:1, auto-compounding rewards.
- Node Operators: Lido DAO delegates assets to vetted validators.
- Reward Distribution: 90% to users, 10% as fees (5% to treasury, 5% to operators).
👉 Discover how Lido outperforms competitors
Lido’s Revenue Model
Lido earns 10% of staking rewards, split evenly between its treasury and node operators. By May 2025, cumulative revenue exceeded $237 million.
Pros and Risks
Advantages
- Capital Efficiency: stETH enables DeFi participation.
- Low Barriers: No minimum stake requirements.
Risks
- Slashing: Validator failures may impact rewards.
- Smart Contract Vulnerabilities: Audited but not risk-free.
- Regulatory Uncertainty: SEC scrutiny over staking securities.
- Centralization: ~700 node operators vs. Rocket Pool’s 1,500+.
LDO Tokenomics
- Token: LDO (ERC-20).
- Supply: 1B LDO (897M circulating).
- Price (Apr 2025): $0.8514 ($764M market cap).
- Utility: Governance voting, staking rewards.
Allocation
| Recipient | Share | Vesting |
|---|---|---|
| DAO Treasury | 36.32% | DAO-controlled |
| Investors | 22.18% | 1-year lock + 12mo vesting |
| Validators | 6.5% | Same as investors |
| Developers | 20% | Same as investors |
| Founders & Employees | 15% | Same as investors |
Team & Backers
- Co-Founders: Jordan Fish (Cobie), Vasiliy Shapovalov, Konstantin Lomashuk.
- Investors: Paradigm, A16Z, Coinbase Ventures, DragonFly ($145M raised).
2025 Outlook
Performance Metrics
- TVL: $18.3B (down 43% from Jan 2025).
- Revenue: $1.5M (May 2025 vs. $8.8M in Jan).
- Users: 7.5K monthly active (up from 6.8K).
Expert Predictions
- CoinPedia: LDO could reach $11 by 2030.
- Botsfolio: $6–$10.25 in 3–5 years.
Competitor Comparison
| Protocol | TVL | APR | Market Share |
|---|---|---|---|
| Lido | $17.4B | 3.6% | 68.76% |
| Binance stETH | $3.75B | 4.47% | 14.83% |
| Rocket Pool | $1.34B | 3.31% | 5.29% |
👉 Explore Lido’s growth potential
FAQ
Which blockchains support Lido?
Ethereum, Solana, Polygon, Arbitrum, Base, and 10+ others.
Is Lido staking safe?
Yes, but risks include smart contract bugs or validator slashing.
What services does Lido offer?
Liquid staking with stETH for DeFi integration.
Disclaimer: This content is not financial advice. Conduct independent research before investing.