The Ethereum (#ETH🔥🔥🔥🔥 ) steaking market in 2024 has slowed down significantly after the rapid growth seen last year. The queue for $ETH
validators to launch averages less than 1 day, only occasionally reaching 4 days, a significant decrease from the peak of 45 days in June 2023. Concurrently, ETH staking rewards have also plunged, yielding yields on other large Tier 1 blockchains such as Cosmos, Polkadot, Celestia and Solana, where yields range from 7% to 21%.
Nevertheless, Ethereum staking still remains the benchmark for yield in the world of decentralized finance (DeFi), resembling the U.S. federal rate in the traditional economy. Ether (ETH) is consistently used for valuation and comparison. Changes in yields can impact other protocols and DeFi projects.
A slowdown in fund inflows is also evident in the largest participant in the Ethereum staking market, the Lido project. The volume of frozen ethers (stETH) remains around 9.6 million ETH. Total ETH deposited in the Beacon Chain contract increased by 5.7 million ETH in 2024, significantly lower than last year's growth.
The share of Lido's stETH, which accounts for about 28% of the total ETH betting market, has increased by just 5% YTD, in marked contrast to the 90% growth in 2023. Despite the modest growth figures, stETH is still heavily used as collateral in DeFi protocols, and Lido remains the largest DeFi protocol in terms of total blocked funds (TVL).
However, increasing competition from new players such as Spark and Morpho, as well as growing interest in alternative staking methods, including EtherFi, has led to a decline in the share of stETH in major credit protocols. For example, at Aave, the (w)stETH share of total stETH supply has fallen from 20% in 2023 to 13% this year, and this trend is continuing.
Competition is also intensifying within the DeFi protocols themselves, where the number of token variants that can be used as collateral is growing. The share of (w)stETH on Aave has fallen from 46% at the start of the year to 27% last week, reflecting a market shift towards more favorable and flexible options for investors.