According to a report recently released by Kaiko, the staking ETH market cooled down in 2024. Since August, the average ETH validator queue time has been less than one day, rarely exceeding four days throughout the year-significantly shorter than the peak of 45 days in June 2023. Exacerbating this situation is the decline in ETH staking rewards. Currently, ETH staking yields are lower than those offered by other major L1 protocols such as Cosmos, Polkadot, Celestia, and Solana, which offer rewards between 7% and 21%.
While staking inflows have begun to taper off, supply growth for the largest Ethereum staking participants has leveled off. Lido-staked ETH stETH supply has remained relatively stable this year, averaging 9.6 million ETH. This reflects a slowdown in the total amount of ETH deposited into the beacon chain contract, which has increased by about 5.7 million ETH this year after nearly doubling last year.
Lido’s stETH accounts for about 28% of the total staked ETH market and has only grown by 5% so far this year, far below 90% in 2023. stETH is still widely used as collateral in DeFi, and Lido is the largest DeFi protocol by TVL.
However, with new projects offering higher returns such as Spark and Morpho, as well as re-staking alternatives such as ether.fi, competition between protocols has intensified. (w)stETH deposited on lending protocol Aave as a percentage of the total stETH supply on Ethereum has fallen from 20% to around 13% in 2023, remaining relatively flat this year.
In addition to competition at the external protocol level, stETH is also facing increasing competition as collateral in DeFi protocols. As of last week, the share of (w)stETH deposits on Aave has dropped from 46% at the beginning of the year to 27%. #opbnb
