Lido’s Ethereum Staking Dominance Crumbles as Rivals Circle—What’s Next?
Lido’s iron grip on Ethereum staking is slipping—fast. Once the undisputed king of liquid staking, the protocol now faces a swarm of hungry competitors chipping away at its market share. Who’s eating Lido’s lunch?
The numbers don’t lie. As of August 2025, Lido’s staking share has plummeted to a record low, a stark contrast to its earlier dominance. New players—from Rocket Pool to upstart EigenLayer forks—are offering juicier yields, slicker UX, and fewer strings attached. Even Coinbase is muscling in with institutional-grade staking services.
What went wrong? Critics point to Lido’s creeping centralization risks and fee structures that suddenly look bloated next to leaner rivals. Meanwhile, Ethereum’s Shanghai upgrade made unstaking frictionless—turbocharging competition overnight.
One cynical take? The ‘lazy money’ era of staking is over. With real yields now up for grabs, protocols can’t coast on first-mover advantage alone. Either adapt or watch your TVL bleed out—the market’s ruthlessly efficient at pruning complacency.
Rising Competition and Market Diversification
The Ethereum staking ecosystem is maturing. Besides Lido, the market now hosts institutional-focused operators, decentralized community-run protocols, and exchange-backed staking services.
Consequently, Ethereum’s staking model is moving away from concerns about centralization. “There was a big community effort to ensure that Lido did not reach 1/3 of total stake,” said Rocket Pool’s general manager, Darren Langley.
Moreover, Figment has emerged as one of the largest beneficiaries of this rebalancing. Known for serving institutional clients, Figment has seen ETH deposits from funds and asset managers accelerate sharply.
As per Figment, ETH staking demand from its clients doubled after the SEC clarified in May that staking is not a securities activity. Last week, the SEC confirmed that liquid staking participants also need not worry about securities laws.
Institutional Growth Potential
Recently, BlackRock applied to launch an Ethereum ETF with staking. If approved, it WOULD give the end-of-day investors a direct way to get staking rewards for their Ethereum. Such an advancement will also attract institutional money to Lido and key parties. This will resurrect Lido’s growth and trigger high demand for LDO tokens.
Figment CEO Lorien Gabel reflected the sector’s momentum, stating, “Now that the largest institutions in the world are embracing digital assets, we’re busier than ever onboarding them.”
The declining market share for Lido indicates a stronger and more competitive staking ecosystem for Ethereum. This drop, while it might seem like a blow, might also be the occasion for institutional adoption and concrete regulations to come to further growth.
Also Read: Norway Wealth Fund’s Bitcoin Exposure Grows 192.7% to $862M
