Lidos Ethereum Staking Share Drops to 25%, a New Low Since March 2022

The previously leading Ethereum staking platform, [Lido Finance](https://forklog.com/cryptorium/chto-takoe-lido), has reduced its market share to 25%, marking its lowest level since March 2022, as noted by Tom Van from Entropy Advisors.

In February, its share was 32%, while by March it had dropped to 29.6%. Overall, Lido’s stake has declined by 5% over the past six months, the expert added.

The top three positions are held by centralized exchanges Binance and Coinbase, with shares of 8.3% and 6.9% respectively.

Additionally, 19% of the market is occupied by unidentified validators. Van pointed out that these could include both individual stakers and larger organizations that choose not to disclose their wallet information for various reasons.

On July 16, the total amount of staked deposits reached a record high of approximately 36.5 million ETH, before slightly decreasing to 36.1 million ETH at the time of writing. Lido experienced the largest net outflow in the past month.

The queue for validators wishing to exit surged dramatically from 1,920 to over 475,000 within a week, with waiting times extending to nine days. Galaxy Digital Research partially attributed this spike to the increased requirements introduced by the [Pectra upgrade](https://forklog.com/news/v-ethereum-vyshel-apgrejd-pectra). However, experts cited a cascading reduction in leverage within [Liquid Staking Tokens (LST)](span) assets as the main contributing factor.

«This volatility was triggered by a sharp decline in ETH supply on Aave, stemming from a [large withdrawal](https://forklog.com/news/krupnye-vyvody-iz-aave-sprovotsirovali-defitsit-likvidnosti) of funds linked to the HTX exchange,» analysts explained.

During the past week, borrowing rates for WETH on Aave increased from 2% to 18%, rendering popular “cyclical” leveraged staking strategies unprofitable. In the so-called looping strategy, users borrow ETH on platforms like Aave against LST or [Liquid Restaking Tokens (LRT)](span) collateral and convert the funds back to boost staking yields.

As borrowing rates rose, investors began to close their positions, leading to the decoupling of Lido’s stETH from ETH, according to Glassnode.

Co-founder of Aavechan, Marc Zeller, [confirmed](https://cryptoslate.com/lidos-market-share-shrinks-as-steth-struggles-with-depegging/) that large withdrawals from Aave had impacted the market. This situation caused a spike in the utilization ratio on the lending platform. However, he assessed that conditions are stabilizing and borrowing rates are normalizing.

It’s worth noting that in July, Aave became the first of the DeFi lending protocols to reach a total net deposit volume of [$50 billion](https://forklog.com/news/obem-chistyh-depozitov-na-aave-dostig-rekordnyh-50-mlrd).