Since the introduction of Proof-of-Stake (PoS) on the Ethereum blockchain, the landscape has witnessed the emergence of liquid staking projects. These platforms enable users to stake their Ethereum (ETH) while receiving liquid staking derivatives tokens in return.
These derivatives, such as stETH, provide investors with a unique opportunity to continue earning staking rewards while maintaining flexibility with their ETH holdings. This flexibility allows them to actively participate in various decentralized finance (DeFi) activities, making staking an attractive proposition for many.
Leading the charge in this growing sector is Lido, offering users stETH as a representation of their staked ETH. Glassnode, an on-chain analytics firm, recently examined the potential impact of these derivative tokens on the Ethereum ecosystem.
As per Glassnode's data, approximately 23% of the Ethereum supply is currently locked within staking contracts. Notably, 32% of this staked ETH is channeled through the Lido platform, equivalent to 7% of the total circulating ETH supply.
Essentially, staking via Lido involves locking ETH to obtain stETH, effectively replacing 7% of the circulating ETH supply. The graph illustrates that the dominance of stETH in this sector continues to grow.
This surge in popularity can be attributed to stETH's appeal as a yield-bearing asset, drawing the attention of investors. There is even speculation that stETH could potentially replace ETH as Ethereum's reserve currency, according to Glassnode.
To gauge adoption, Glassnode relies on the "new addresses" metric, which tracks the daily creation of addresses. Comparing the adoption trends of ETH and stETH, the data indicates that stETH is gaining significant traction.
While Ethereum has recently experienced a notable price correction, dropping to around the $1,600 level, stETH's accelerating adoption suggests that it is making strides in tapping into the growing demand for Ethereum's staking services.
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