Following the highly-anticipated "The Merge" and the Shanghai hard fork, the world of Ethereum staking saw some clear patterns emerging. Currently, over 20% of ETH’s entire supply (28,196,204 ETH) is staked, with more participants joining daily due to low risks, attractive returns, and lackluster market conditions.
With more and more people jumping on the staking bandwagon, it has become essential to understand the most popular methods and platforms for ETH staking.
In this educational article, we will break down the most popular ETH staking methods and platforms and their dominance. The information in this article is based on data from Dune Analytics and is relevant at the time of publication.
Solo staking ETH is considered the most decentralized way to stake Ethereum. However, it comes with high requirements that have made it a bit too much for the average Ethereum staker. These requirements include a minimum of 32 ETH per node for a validator, technical expertise, and a computer with 24/7 interconnectivity. As a result, only 18% of all staked ETH is done via solo staking.
Despite the high requirements, solo staking ETH offers several advantages. For one, it eliminates the need for a third-party platform, making it the most decentralized option available. Additionally, solo staking ETH gives you complete control over your funds, which can be reassuring for those who prioritize security.
Staking ETH on exchanges has become an increasingly convenient method to stake Ethereum, especially for individuals who already have funds on an exchange. This method tends to have lower requirements for staking, and some exchanges even offer a liquid token for stakers. Roughly 25% of staked ETH is done via an exchange.
One of the most popular exchanges for staking ETH is Coinbase, which controls 13.5% of staked ETH. Coinbase offers a user-friendly interface and takes care of the technical complexities for you. Another popular exchange for staking is Binance, which lags behind slightly with 4.4% of staked ETH.
Staking as a service or SaaS has not been as popular as other staking methods. Staked.us, the leading SaaS platform, only accounts for 2.38% of staked ETH, and Stake Fish, the second most popular choice, accounts for 1.19%.
The low popularity of SaaS platforms could be attributed to the fact that they tend to have higher fees compared to other staking methods. Additionally, users have to trust the platform to manage their funds, which can be a concern for those who prioritize security.
Despite the low popularity, SaaS platforms offer several advantages, such as a user-friendly interface and taking care of the technical complexities for you.
Liquid staking is gaining popularity as the most common way to stake Ethereum. It provides a way for ETH holders to stake their assets without locking them up for a long period of time. Platforms like Rocket Pool and Hord have low staking requirements and offer tokens that mirror an individual's stake, allowing users to access liquidity while still participating in the network.
Rocket Pool is one of the most popular platforms for liquid staking, accounting for 2.85% of all ETH staked. It offers a decentralized staking pool that allows anyone to become a validator and earn rewards for staking their ETH. With Rocket Pool, users can stake any amount of ETH and still receive rewards, making it an accessible option for small and large investors alike
Hord, on the other hand, lags far behind Rocket Pool, accounting for a mere fraction of the market share. However, it still offers an attractive option for those looking to stake their Ethereum without the need for technical knowledge or large amounts of capital.
Lido was the first liquid staking platform to launch, and it has a strong hold on the Ethereum staking ecosystem. Over 30% of all ETH staked is done via Lido, making it the largest staking pool in the Ethereum network. Its user-friendly interface and seamless user experience have made it a popular choice among investors looking to stake their assets.
However, Lido's massive dominance in the market has raised concerns regarding the decentralization of the Ethereum staking ecosystem. Some, including Ethereum's creator Vitalik Buterin, have expressed concern that the concentration of staked ETH in a single entity like Lido could pose a risk to the network's security.
Despite the concerns, Lido has continued to grow and expand its offerings, launching support for staking Solana and Polygon as well. As the trend toward liquid staking continues to grow, it will be interesting to see how Lido and other platforms evolve to address the challenges of decentralization.
Ethereum staking is likely to retain its popularity and possibly even grow in the future, depending on market conditions. As more investors seek to earn passive income through staking, the demand for staking services is likely to increase.
However, concerns regarding the centralization of staking platforms are valid. Stakers should consider platforms that do not control over 25% of all ETH staked to ensure the network remains decentralized and secure. As the Ethereum staking ecosystem continues to evolve, it will be important for investors to carefully evaluate their options and choose platforms that align with their goals and risk tolerance.