Lido faces growth dilemmas: uncertainty about the future of the ETH staking market

Author: Jian Chen, Jason, independent researcher Source: X (formerly Twitter) @jason_chen998

Lido has recently undergone a series of changes, starting with the closure of the Solana staking service and now the community proposing to close the Polygon service. The main reason is that the community believes that the return on these two services is too low, no longer cost-effective, and introduces unnecessary complexity. Some in the community have suggested that Lido should focus on becoming Ethereum's native staking service provider.

At present, the future of Lido is becoming less clear. Although Ethereum staking services are its largest source of revenue, it faces some challenges. Some core figures, such as Ethereum co-founder Vitalik Buterin and Ethereum core developer Tim Beiko, have expressed their support for further growth of Lido. This is because the 33% pledge ratio has become the consensus red line of the entire industry, and exceeding this ratio will cause security and political problems.

Lido is currently in a very difficult position because its pledge ratio is close to 33% and cannot continue to grow. At the same time, the interest rate of ETH staking services has dropped to 3%, the number of validators is large, the number of new ETH entries is insufficient, and there is no longer enough profit.

The future path of Lido becomes less clear unless two possibilities arise:

1. The ETH spot ETF is approved, attracting a large amount of money into ETH staking, but this will also reduce the pledge rate again.

2. Ethereum's on-chain transactions are booming again, and Ethereum maintains its supremacy, driving the growth of validators.

Lido needs to face these challenges and find strategies for sustained growth.

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