Earlier this year, Ethereum [ETH] underwent its major Shapella upgrade which allowed stakers to withdraw their staked Ether. This was the next major update that Ethereum had after it turned into a PoS chain from PoW. On the liquidity staking front, Lido ETH is one of the most popular tokens that is currently available in the market. However, considering that Ethereum has now allowed users to unstake their assets, is it still a good option to stake ETH on Lido?
Read Lido Staked Ether’s [stETH] Price Prediction 2023-24
Ethereum 2.0 allowed staking
As is known by all, Ethereum turned into a PoS chain from a PoW one just recently. This update changed the dynamics and nature of the blockchain significantly. The event “Merge” also helped ETH reduce energy consumption by more than 99%. The shift from PoW to PoS caused Ethereum to switch from a mining model to a staking model blockchain.
A look at liquidity staking
For starters, liquidity staking allows users to lock up their assets and become validators, helping improve a PoS chain’s security. 2020 saw the debut of Ethereum’s beacon chain and Lido emerged to provide an ETH Liquid Staking Derivative, allowing users to stake their assets and earn rewards in return. People who have converted their ETH to Lido Staked Ether [stETH] can readily sell the tokens for ETH at any time while earning rewards on the stETH tokens they hold.
Lido ETH benefits are quite many
Lido ETH, as the most popular staking token, has several other benefits as well. For instance, using Lido, stakers can earn rewards without having to lock up their assets. Stakers can get rewards for making any modest investment they choose. Thanks to the same, to date, 6,493,885 ETH have been staked on Lido, which has a market capitalization of over $11 billion with a 5% APR.
To put it into perspective, in total, 18.7 million ETH were staked, out of which 34% accounts for Lido balance, proving its popularity and mass adoption.
Source: Staking Rewards
Ethereum network is getting stronger
While stETH remains the leader in Ethereum staking, growth was seen in the overall ETH staking ecosystem. As per Staking Rewards, the number of validators has risen considerably over the last 30 days, meaning that the blockchain’s security has improved. Additionally, Glassnode’s data revealed that ETH 2.0’s total value staked skyrocketed – An encouraging development for the network’s future.
Source: Glassnode
Lido ETH’s current state
At press time, stETH was trading at $1,799.19, making it the 201st largest crypto by market cap, according to CoinMarketCap. The popularity of the token was yet again proven when checking its metrics. As per Santiment, the total amount of stETH holders has risen sharply. The big players are also interested in stETH, as is evident from its rise in the supply held by top addresses.
Its network growth remained high, suggesting that more new addresses have been created. However, as stETH’s price recently took a sideways path, its exchange inflow spiked quite a few times – A negative sign for the crypto.
Source: Santiment
A look at Ethereum’s performance
Ethereum, like most other cryptos, has also struggled to push its price north in recent days.
At press time, it was trading at $1,803.22 with a market cap of over $216 billion. However, ETH might be setting up its next bull rally as a few of the market indicators looked bullish.
ETH’s Money Flow Index (MFI) bounced back from the oversold zone and was heading north. The Chaikin Money Flow (CMF) also followed a similar trend, increasing the chances of a price uptick in the coming days. However, the Exponential Moving Average (EMA) Ribbon remained bearish as the 20-day EMA lay below the 55-day EMA.
Source: TradingView
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stETH vs. ETH
As both tokens are readily available to trade on multiple platforms, investors might have doubts about which one to pick. It’s interesting that if stETH is available to buy at a lower rate than ETH, the former token might actually be the better choice. However, at press time, the difference between the prices of both tokens was marginal. Ergo, investors should consider their decisions carefully.