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Rapid growth in DeFi-focused Ethereum liquid staking derivatives platforms raises eyebrows

Published 06/03/2023, 02:52 PM
Updated 06/04/2023, 06:00 PM
© Reuters
ETH/USD
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Ether’s (ETH) decentralized finance (DeFi) activity has declined in the bear market, and the sector faces further competition from Ethereum’s annual staking reward of 4%, according to Glassnode analysts. However, a DeFi narrative is building around liquid staking derivative (LSD) tokens, which could revive Ethereum’s network activity.

The percentage of gas consumed by DeFi protocols has dropped from 34% in 2020 to between 8% and 16% presently, with nonfungible tokens (NFTs) commanding the maximum share of 25–30%, according to a recent report from Glassnode.

Ethereum gas usage by transaction type. Source: Glassnode
ETH vs. DeFi tokens price performance. Source: Glassnode
LSDfi total value locked. Source: Dune

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