Did you know that you can earn interest on your digital assets by staking your cryptocurrency? This works similarly to how depositing fiat money into a bank earns interest on it. When you stake cryptocurrency in a pool, you help validate and maintain a blockchain network and get paid for your efforts. 

In this blog, we will look at the largest liquid staking platforms for the Ethereum blockchain network, such as Lido and Rocket Pool.

What is Lido?

Lido Finance is a DeFi protocol that allows for liquid staking of Ethereum (ETH), and Polygon (MATIC). It was founded in December 2020, and has emerged as a major player in the staking landscape, directing over 31% of the ETH staking market. Traditional staking mechanisms encourage users to keep their tokens locked up for an extended period of time, limiting their access to liquidity. Lido’s liquid staking solution, Lido Staked Ethereum (stETH) tokens, address this issue. When users stake their ETH through Lido, they receive stETH in exchange, which represents their staked ETH and allows them to accumulate staking rewards.

Key Features of Lido

• Accessibility: Lido removes the minimum staking requirement, making it available to users of all skill levels.
• Liquidity:  stETH tokens retain liquidity, allowing users to participate in DeFi activities without risking their staked ETH position.
• Passive Income: Lido provides a competitive staking APR of 6.7% for ETH, allowing stakers to earn passive income.

What is Rocket Pool?

Rocket Pool is a decentralized Ethereum (ETH) staking protocol, and it was launched in November 2021, allowing users to participate in staking without having to run their own nodes. It is currently restricted to the Ethereum network, and has quickly gained traction, becoming the second-largest liquid staking pool for Ethereum, with a 2.8% market share.

Key features of Rocket Pool

• Non-custodial staking: Rocket Pool employs non-custodial staking, meaning that staked ETH is not held by Rocket Pool but rather distributed among node operators. This safeguard protects users’ funds even if node operators misbehave.
• Flexible staking options: Rocket Pool offers two staking options: stake and run a node or stake and receive rETH tokens. This flexibility caters to users with varying levels of technical expertise.
• Variable commission fee: Rocket Pool’s commission fee on staking rewards dynamically adjusts between 5% and 20%, depending on the supply and demand for staking services. This mechanism helps balance node operator incentives and user rewards.

The Milestone

Lido has been at the center of this market for a long time, and on November 21, 2023, it passed a significant milestone by surpassing ~ 9 million in ether deposits. Lido had ~ 9.28 million ethereum (ETH) in deposits as of December 3, 2023. The platform received 490,000 ether in the previous 36 days, beginning on October 27, 2023.

Based on current exchange rates, the protocol’s current total value locked (TVL) is estimated to be ~ $20.05 billion. Lido controls 77.81% of the market share among the 25 liquid staking protocols (LSPs). 

Rocket Pool, the second-largest player, deposited ~ 49,214 ether in the course of 36 days. Additionally, Rocket Pool recently passed the ~ 1 million ETH in TVL mark, which is a significant milestone. 

While Lido and Rocket Pool both saw deposits of over 49,000 ether, Binance’s LSP saw a more modest 3,459 ETH increase since October 27. Lido’s STETH is listed among the top ten staking token derivatives on a few market aggregation platforms, such as coingecko.com, but not on coinmarketcap.com. STETH’s market capitalization would place it eighth if it were named one of the top ten crypto assets today.

Conclusion

In the realm of Ethereum’s liquid staking, Lido’s established dominance and user-friendly features contrast with Rocket Pool’s innovative approach and rapid growth. Lido’s extensive market share and accessibility stand out, while Rocket Pool’s non-custodial model and dynamic fees showcase promising innovation. Each platform offers distinct advantages, contributing uniquely to Ethereum’s staking landscape. The competition between these two highlights the diversity of strategies in the evolving crypto ecosystem, providing enticing opportunities for investors seeking to earn passive income through staking.