Ethereum’s Shanghai is creating traction for liquid staking protocols

According to Defillama, the total value of assets locked (TVL) in liquid collateralized derivatives (LSD) protocols has grown to $14.09 billion — making it the second-largest DeFi category.

Liquidity staking protocols have surpassed lending protocols with a TVL of $13.68 billion and are second only to decentralized exchanges (DEXs) with a TVL of $19.33 billion.

The Liquidity Staking Protocol allows users to earn staking rewards while also providing liquidity for other crypto-based operations. Examples of this protocol include Lido, Frax Ether, Rocket Pool, etc.

With Ethereum’s Shanghai upgrade expected to allow stakers to withdraw their staked ETH, the liquid staking protocol has renewed interest among community members.

Additionally, recent U.S. regulatory actions against centralized staking service providers have given these protocols an edge over their centralized competitors.

DeFillama data shows that more than 7 million ETH have been pledged through these platforms, of which Lido occupies 75% of the space. Other DeFi protocols, such as Rocket Pool and Frax Ether, have seen significant growth over the past month.

Meanwhile, interest in these protocols has helped their governance tokens rise in price. Lido’s LDO is up more than 200% year-to-date, outpacing the price performance of leading digital assets like Bitcoin and ETH.

  • Justin Sun just staked over 150,000 ETH on Lido Protocol
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According to Cryptoslate

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