Liquid staking survived with minimal outflows in Q2
Liquid staking holds 14.5M ETH, based on Cryptoquant data. The staked ETH lost just 1.3% from its all-time high, when 14.7M were locked for liquid staking. In the past three years, liquid staking deposits increased from 8.6M ETH to 14.5M ETH, a net gain of 68%.
Liquid staking is a key source of reserves for DeFi lending, trading, and other operations. While almost all other crypto sectors have declined sharply in Q2, liquid staking shows its position as key infrastructure in the crypto space.
Ethereum staking overall accelerated in the past quarter, adding another 1M ETH in June alone. Another 2.7M ETH are waiting to be staked in the validator queue. The recent staking inflows are also seen as an indicator of smart money seeking passive income on Ethereum.
Over 40.3M ETH, or around 33% of the total supply, are now held in the Beacon Chain, supporting the minting of liquid staking tokens. The long-term effects of staking on ETH are offsetting some of the market panic.
Staking has expanded beyond Ethereum, with other networks offering similar incentives. Overall, liquid staking tokens are valued at over $54B.
Liquid staking protocols are among top fee producers
Liquid staking pools are among the key elements of the crypto economy, with ongoing fee generation and positive revenues for most protocols.
Lido DAO remains the leader, with over $16B in value locked, nearly 50% of all liquid staking liquidity. The protocol achieves $1.99M of earnings monthly. Overall, liquid staking protocols generate over $20M in fees, while securing the Ethereum network.
Liquid staking is also supporting the existing ETH treasury companies, ensuring some of the ETH is productive and not just sitting in wallets.
ETH switches from speculation to accumulation
Liquid staking still happened even as ETH hovered around the $1,700 range. ETH markets move with around $10.5B in open interest, showing a slowdown of price speculation.
Exchange reserves on all markets are near multi-year lows, as markets only hold around 15M ETH. Binance holds around 3.86M ETH, with dynamic inflows and outflows. The exchange showed a mix of capitulation selling in the $1,500 range and withdrawals from whales. Ethereum outflows from Binance reached $1.23B, the highest level in the past three years, as speculative trading and leverage slowed down.
Some of the exchange withdrawals are moving into liquid staking, feeding into the Ethereum DeFi ecosystem. On-chain data shows specific whales are also accumulating ETH on Binance and sending it for liquid staking. One whale recently moved 4,491 ETH to Lido staking. The same whale withdrew 34,557 ETH from Binance, building a large position in liquid staking.
The ETH market is still indecisive, as crypto trading still absorbs different price pressures. The Iran conflict is still causing immediate market reactions and sometimes, panic selling. However, the conviction signals of liquid staking show a big part of the liquidity is bound to remain in DeFi space.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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