Analyst Note: Staking Done Well

With Ethereum’s successful transition to Proof-of-Stake, validators’ real returns have spiked considerably from nearly 0% to 6%. As a result, the stETH discount has evaporated, and there have been greater inflows to the staking contract. Lido has had the highest absolute contribution to this growth, while Rocket Pool has grown the fastest on its small base. Layer-2 (L2) liquidity is becoming more critical, and there has been a surge in stETH L2 liquidity after Lido announced an incentive plan. While there are exciting avenues for growth, concerns about censorship have cast a shadow over the runaway success of Ethereum and its staking protocols.