Following the withdrawal of staking introduced by the Shapella update on Ethereum, Lido has just introduced the possibility of recovering its ETH against stETH. At the same time, staking has never been so important on the network.
stETH can now be exchanged for ETH from Lido
In the continuity of its governance vote, the liquid staking platform Lido deployed its V2 yesterday, thus allowing the withdrawal of ETH against stETH :
Following a successful on-chain vote, Lido V2 is officially here.https://t.co/36EmuagToD
—Lido (@LidoFinance) May 15, 2023
As a result of this announcement, Lido’s LDO is up 8.2% over the past 24 hours.
Since the Shapella update on April 13, it is technically possible to withdraw from staking on Ethereumbut the third parties facilitating the process needed a little extra time to finalize everything for their users.
These withdrawal requests were still very marginal when these lines were written, the protocol having received more or less 770 stETH equivalentaccording to a chart by Will Sheehan, founder of on-chain analytics tool Parsec:
Applications to exchange stETH for ETH
Note that these are indeed withdrawal requests and not actual withdrawals. Indeed, there is a queue to get out of staking, which is around 1-2 days currently from Lido.
Note that the Lido protocol alone accounts for 29% of all ETH staked on Ethereum.
👉 To go further — Find our guide to staking on Ethereum
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The point about staking on Ethereum
While part of the community expressed concerns about hypothetical massive withdrawals of ETH when possible, the reality is quite different. And for good reason, staking has never been more important than since the Shapella update.
Despite withdrawals amounting to more than 2.68 million ETH, or $4.86 billion at the current rate, the net balance of deposits is 21.67 million ETH, or almost 39.3 billions of dollars. It is therefore 17.6% of the total amount of ETH currently used to secure the network.
Alongside this all-time high in staking, Lido has also proven the viability of its liquid staking model. Indeed, remember that almost a year ago, doubts appeared as stETH lost value against ETH, of which it is supposed to be at parity.
This depeg was caused by the massive sales of Celsius, which was desperately trying to get its head above water by selling huge amounts of stETH, thus fueling a vicious cycle. Indeed, although today it is possible to burn 1 stETH to receive 1 ETHtrading via liquidity pools is subject to market volatility.
Anyway, now that the final settings for Ethereum’s move to consensus by Proof of Stake (PoS) have been finalized and shown to work, the amount of ETH staking should continue its organic growth.
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Sources: Lido, Parsec
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