LIDO : Merge Staking Providers

In this article, we aim to document Ethereum Merge and also highlight Lido as a liquid staking provider and answer the following question: How much ETH was staked? What is the number of unique depositors? In terms of ETH deposits, what is the average, median, maximum, minimum, and distribution?

An Introduction About ‘The Ethereum Merge’

With the merge, Ethereum makes the transition from proof-of-work (PoW) to proof-of-stake (PoS). The proof-of-work method of consensus on the blockchain relies on the lockup of a staker’s Ethereum. Computing power is required to secure blockchain consensus. This is done by people (miners) who secure the network.
In order to solve the blockchain trilemma, Ethereum has worked on a variety of problems:
Security , decentralization and scalability The blockchain so far has compromised on at least one of these features. However, it is still helpful.

What are the benefits of the Merge?

The Merge allows for decentralization and security by requiring a minimal number of nodes and reducing the amount of work required to run nodes Compared to PoW, PoS requires 99% less energy Through scalability, it opens the possibility of sharding and 100k TPS in the future.

How does it works ?

  • Ethereum is deposited into your account.
  • Validators stake cryptocurrency with the protocol.
  • You receive the staked ETH in the form of a liquid (sellable) wrapper.
  • You will earn interest on that. If you want, you can trade in these liquid wrappers.

For Example: All of RocketPool, Lido, and StaFi let you use Ethereum for this, although their mechanics, decentralization, and composition differ slightly.ETH tokens can be used to earn interest.

Staking Deposits and Amount Staked On ETH2 By LIDO

As part of this section, we will look at how LIDO stakes on ETH and the amount staked. Let’s take a moment to introduce LIDO Stake provider before we proceed.

What is Lido and what problems does Lido solve?

Ethereum’s transition to proof of stake (PoS) began on December 1st, 2020, with the launch of the Beacon Chain. As a result, holders of Ethereum tokens were able to earn rewards by staking their tokens to protect the Ethereum network. However, staking is not something a typical ETH cryptocurreny holder can do because it requires extensive technical knowledge to make it work. Here are some issues associated with staking ETH tokens.

1. Technical expertise: It is important for a person to have the ability to install and update software all the time so as to stay current with the latest release of the stake module. The failure to run the software due to power outages or other issues results in a loss of rewards and in the worst case, staked Ethereum.

2. No unstaking: Due to the fact that Ethereum 2.0 has not yet been launched and no deadline has been set, once ETH tokens have been staked they cannot be withdrawn until Ethereum 2.0 is launched. Because there is no deadline for Ethereum 2.0 network launch, no one knows when they will be able to withdraw their funds. Probably by the end of 2023, maybe even earlier. All depends on how quickly Ethereum core developers complete the transition from Proof of Work to Proof of Stake.   

3. ETH Token requirements: In order to serve as a validator and stake tokens, one must have ETH tokens worth 32 ETH. At today’s ETH price it is more than 100,000 USD investment one must make to start earning staking rewards. 

Lido tackles all these problems head on and solves them elegantly. With LIDO, anyone can stake ETH tokens even if they only have a fraction of them. Lido’s liquid staking solution for Ethereum is backed by the biggest providers.

How Lido Works?

In essence, Lido is an Ethereum smart contract that allows ETH holders with less than 32 ETH to pool their funds and earn rewards. Pooled funds are distributed among selected operators of Ethereum validators that are required for staking operations.

Lido also solves the liquidity problem of ETH stakers by issuing a special ERC20 token, stETH, at a 1:1 ratio when users deposit their ETH for staking. StETH tokens can be traded, transferred, and used in major Defi protocols, just like ETH. If a user wishes to unstake their ETH, they can sell stETH on Curve for ETH and use it however pleases them.

How much ETH as staked by Lido?

From the below graph we can see howmuch ETH as staked by Lido on daily basis. In the period December 18, 2020 to September 5, 2022, 4.17 million ETH was staked. On March 15, 2022, Staked ETH reached its maximum of 197.26K, and on December 18, 2020, it reached its minimum of 1.53. From December 18, 2020 to September 5, 2022, the total Staked ETH increased by 48.24 times.  The total number of Staked ETH in April 20, 2021 and May 23, 2021 is lower than normal, while in May 22, 2021 and May 9, 2022 it is higher than normal. If we look at the trend of staked ETH by Lido , which we can see an increasing trend from the beginning of the Jan 2021 upto May 2022.

A maximum of 197.26K Staked ETH was reached on March 15, 2022, and a minimum of 1.53 was reached on December 18, 2020.  All of these changes can be attributed to Ethereum’s recent announcements. In addition to announcing that a new version of Ethereum will be released soon, it has been announced that Kiln is nearing completion, making it more likely than ever that Ethereum could “merge.” We can also see that the total staked in Ethereum has reached up to 10 million dollars, which is very impressive.

From the below graph we can see clearly the decreasing trend of staked ETH by Lido after May 2022. After May 2022, the volatility of the crypto market, we can observe a decline in ETH staked by Lido.

Based on the below graph, the amount of ETH staked by Lido from December 18, 2020 to September 5, 2022 totaled 4.17 million.  

In the below graph, we can see that the number of users that staked ETH with LIDO has been rising week over week since Jan 1 ,2022 and even more recently since Mar 13-19,2022. As a result of Kiln’s completion, Ethereum is now closer to merging than ever before . The growth of staked ETH by Lido, however, hasn’t increased much in recent months. There may have been a reason for this, such as the volatile crypto market situation.

A maximum deposit transaction of 871.57 was observed in W33(Aug15-21), 2021, and a minimum deposit transaction of 12.29 was observed in W119mar28-Apr03), 2021. Overall, the number of deposited transactions in W34(Aug22-28), 2021 and W3, 2021 is lower than normal, while it is higher than normal in W6, 2022, and W32(Aug08-14), 2021. Initially, there were not many transactions, but later they increased. It is once again evident that the trend of deposits by Lido is on the rise.

From the heatmap below we can see the staked deposits on a weekly basis and the day of the week when they were staked is shown from the graph below.

How many unique depositors are there? 

From the below graph we can see the number of daily unique depositors by Lido protocol. There were 109.81K unique depositors between December 18, 2020 and September 5, 2022.  A maximum of 2.51K unique depositors was observed on February 11, 2022, while a minimum of 3 was observed on December 18, 2020. The total number of unique depositors increased by 20.00 times from 3 on December 18, 2020 to 63 on September 5, 2022. 

A maximum of 5.55K unique depositors was observed in W33, 2021, and a minimum of 64 unique depositors was observed in W11, 2021. A reduction of almost three quarters was seen in the total number of Unique Depositors in W36, 2022.  

 A lower number of unique depositors was recorded in week 2 and week 53, while a higher number was recorded in week 6 and week 18.

What is the avg/median/max/min/distribution of ETH deposits? 

Here from the below graph we can see the weekly average deposits by Lido protocol . During December 18, 2020 to September 5, 2022, the average deposit was 22.83K. There is a decreasing trend of average deposits exhibited by W16, 2021 and W36, 2022. The maximum average deposits were observed in W16, 2021 and the minimum average deposits were observed in W36, 2022. The average deposits are decreasing. 

As you can see from the below graph, there is a weekly minimum deposit on the lido protocol. We can see that the minimum deposits are between two and seven deposits. 

The total maximum deposit between W51, 2020 and W36, 2022 was $1.57M. A maximum Max Deposit of 124.96K was observed in W34, 2021, and a minimum Max Deposit of 140 was observed in W36, 2022. Maximum deposits are on a downward trend. In W20, 2022 and W37, 2021, maximum deposits are lower than normal, and in W34, 2021 and W20, 2021, they are higher than normal. 

A maximum median deposit of 10.83 was observed in W2, 2021, while a minimum median deposit of 0.01 was observed in W36, 2022. In W3, 2021 and W21, 2021, average median deposits are lower than normal, and in W2, 2021 and W5, 2021, they are higher than normal.

Observations

  • Based on the above analysis, we can see that 197.26K Staked ETH was reached on March 15, 2022.  Ethereum’s recent announcements are responsible for all of these changes. In addition to announcing that a new version of Ethereum will be released soon, it has been announced that Kiln is nearing completion, making it more likely than ever that Ethereum could “merge.” We can also see that the total staked in Ethereum has reached up to 10 million dollars, which is very impressive.
  • LIDO staking service provides very high staked Ethereum and deposit amounts when compared with other staking services. In order to earn rewards for protecting the Ethereum network, holders of Ethereum tokens staked their tokens. Most ETH holders, however, cannot stake due to the high level of technical expertise required. It was very popular due to these expertise features.
  • The amount staked on Ethereum has also increased from March 2022 onwards, according to my analysis above.  In announcing that Ethereum’s Merge is imminent and completing Kiln, Ethereum is now closer than ever to the “merge.” However, after May, it went down, perhaps because of the volatility of the crypto market.
  • The number of unique depositors on Lido between December 18, 2020 and September 5, 2022 was 109.81K.  The maximum number of unique depositors on February 11, 2022 was 2.51K.
  • There is a downward trend in maximum deposits. The average deposit is decreasing.
  • Based on the graph below, you can see the lido protocol has a weekly minimum deposit. It is evident from the table that the minimum deposits range from two to seven. 
  • Median deposits of 10.83 were observed in W2, 2021, while a minimum median deposit of 0.01 was observed in W36, 2022. 

Reference Query

WITH lido_txns as (
  SELECT 
  		block_timestamp,
  		date_trunc(day, block_timestamp) as date, 
    	tx_hash,
    	origin_from_address as wallet,
    	amount as staked_amount
  FROM ethereum.core.ez_eth_transfers
  WHERE  eth_to_address ='0xae7ab96520de3a18e5e111b5eaab095312d7fe84'
)
SELECT 
  date, 
  count(tx_hash) as deposit_txns,
  count(distinct wallet) as daily_uniq_wallets,
  sum(staked_amount) as staked_eth_sum,
  avg(staked_amount) as avg_deposit,
  min(staked_amount) as min_deposit,
  median(staked_amount) as med_deposit,
  max(staked_amount) as max_deposit,  
  sum(staked_eth_sum) over(order by date asc) as staked_eth_cum
FROM lido_txns
GROUP BY date 

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