Lidos Ethereum Staking Share Drops to Historic Low of 25%

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

Back in February, its market share was at 32%, which dropped to 29.6% in March. Over the last six months, Lido’s share has decreased by a total of 5%, the expert added.

The top three players in this sector now include centralized exchanges Binance and Coinbase, holding shares of 8.3% and 6.9% respectively.

Non-identified validators account for 19% of this space. Van pointed out that these could be individual stakers or relatively large entities that opt not to disclose their wallet information for various reasons.

As of July 16, the total amount deposited in staking reached a record high of around 36.5 million ETH, before dropping to 36.1 million ETH at the time of this writing. Lido has experienced the highest net outflow in the past month.

The queue for validators exiting has surged from 1,920 to over 475,000 in just a week, with the waiting time extending to nine days. Galaxy Digital Research partially attributed this surge to heightened demands created by the [Pectra upgrade](https://forklog.com/news/v-ethereum-vyshel-apgrejd-pectra). However, experts highlighted the cascading reduction in leverage within [LST](https://forklog.com/cryptorium/chto-takoe-stejking)-related assets as the primary cause.

“This volatility stemmed from a significant decrease in the supply of ETH on Aave, prompted by a [large withdrawal](https://forklog.com/news/krupnye-vyvody-iz-aave-sprovotsirovali-defitsit-likvidnosti) of funds from a wallet linked to the HTX exchange,” analysts explained.

In the past week, borrowing rates for WETH on Aave surged from 2% to 18%, rendering popular «cyclical» staking strategies using leverage unprofitable. In this looping strategy, users borrow ETH on platforms like Aave against LST or [LRT](https://forklog.com/cryptorium/chto-takoe-lido)-collateralized assets and convert the funds back to boost staking yields.

As borrowing rates increased, investors began to close their positions, leading to the decoupling of the stETH token from Lido from its peg to ETH, noted Glassnode.

Aavechan co-founder Mark Zeller [confirmed](https://cryptoslate.com/lidos-market-share-shrinks-as-steth-struggles-with-depegging/) that large withdrawals from Aave contributed to the situation, causing a spike in the utilization ratio on the lending platform. However, he assessed that the situation is stabilizing, and borrowing rates have nearly returned to normal levels.

It’s worth noting that in July, Aave became the first DeFi lending protocol to reach a total of $50 billion in net deposits.