The Surge in Demand for stETH Outpaces Ethereum Since LUNA Collapse
Since the introduction of proof-of-stake (PoS) on the Ethereum blockchain, liquid staking projects have emerged, allowing users to stake their ETH and receive liquid staking derivatives in return. These derivatives enable users to earn staking rewards while maintaining flexibility over their ETH, making this method more appealing to investors.
Lido is the leading platform in this space, offering users stETH as a representation of their staked coins. In its latest report, Glassnode examines the impact of this derivative token on Ethereum.
Locked Supply and Growing Adoption of stETH
Glassnode’s data reveals that 23% of the Ethereum supply is locked in staking contracts, with Lido accounting for 32% of this amount, equivalent to 7% of the circulating supply. This indicates that stETH has replaced a significant portion of ETH’s supply, and its share continues to grow.
The surge in demand for stETH can be attributed to its status as a yield-bearing asset, making it attractive to investors. There are even speculations that stETH could potentially replace ETH as Ethereum’s reserve currency.
To assess adoption, Glassnode compares the number of new addresses created daily for both Ethereum and stETH. While the new addresses for Ethereum have declined by around 5% since the LUNA collapse, new addresses for stETH have increased by 142%, indicating accelerated adoption of the derivative token.
Ethereum Price Correction
During the past few days, Ethereum has experienced a significant pullback, with its price dropping towards the $1,600 level.
Hot Take: The Rise of stETH and its Implications for Ethereum
The surge in demand for stETH and its growing adoption indicate a shift in investor preferences towards yield-bearing assets. With the potential to replace ETH as Ethereum’s reserve currency, stETH could reshape the ecosystem. As more users opt for liquid staking derivatives like stETH, the demand for ETH may continue to slow down. This trend raises questions about the future of Ethereum and how it will adapt to changing market dynamics. Only time will tell whether stETH becomes a dominant force within the Ethereum network.
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