What is Lido?

Lido Finance is a decentralized staking platform that allows users to stake their assets without the requirement of locking them or participating in maintaining infrastructure, while at the same time earning the staking rewards. Lido supports ETH staking, as well as SOL, MATIC, DOT, and KSM. On this dashboard, we take a look at ETH staking in Lido for the past 90 days.

Staking involves committing your crypto assets in order to support the security and operation of a blockchain network. By staking their assets, new coins are created as rewards for stakers, which circulate into the market.

Most of the time, the staking process is not accessible to anyone. When Ethereum began to transition into Proof of Stake consensus mechanism on December 1st, 2020, the staking and earning of rewards were made possible for ETH holders. Nevertheless, the entry bar to staking is high due to the technical knowledge required to run the validator software, a minimum of 32 ETH tokens, and the capacity to lock their ETH until the release of Ethereum 2.0, currently scheduled for August 2022.

Lido attempts to bring staking to the average user by removing the inconveniences that come with staking assets. They democratize staking through liquid staking, in which a representation of the staked asset is sent to the users who chose to stake through Lido. This asset is pegged to the true asset staked, and it can be traded by other assets.

Methods

On this dashboard we will take a look at the difference in ETH/stETH received from ETH stakers on Lido swapping between ETH->stETH and stETH->ETH. We will use the following metrics:

• Net gain/loss in ETH-stETH and stETH-ETH swaps. This is the difference in the amount of the assets received when swapping between them. We will show this information for wallets that have previously staked ETH through Lido. We define a net gain/loss as a difference in assets sent and received above 0.01 in absolute value.

• ETH stakers in Lido. We obtain the information on ETH staked with Lido from the transactions in which the stETH token (0xae7ab96520de3a18e5e111b5eaab095312d7fe84) is transferred from the null address 0x0000000000000000000000000000000000000000. We group the ETH stakers depending on their net gain or loss from performing swaps. We show this information both overall and segmented by amounts of ETH/stETH gained/lost.

• stETH price over time measured in ETH.

The first part of our analysis will focus on ETH -> stETH swaps, while in the second we will look at the same information in terms of stETH -> ETH swaps.

Analysis

1117 individual ETH stakers in Lido have swapped ETH for -> stETH as of June 11th, 2022. Moreover, a third of them have received more stETH than they deposited ETH, while less than 6% have received less, and 61% have had a net slippage of less than 0.01 stETH in either direction.

We have segmented the gain/loss based on the net amount of stETH above or below the expected was obtained from swaps. 22.67% of the stakers have gained between 0.01 and 0.1 stETH, while 5.81% have gained between 0.1 and 0.5. Only 4.56% have gained more than 0.5 from swaps. Moreover, while only 3 stakers have lost an amount above 0.5 of ETH when swapping, most of the losses are between 0.01 and 0.1 ETH.

On the stETH -> ETH swap direction there are 4071 stakers that have swapped their stETH for ETH. This is likely because stakers may mostly stake directly in Lido, while the only way to exit stETH is through swapping. 42.1% of the stakers have lost ETH by swapping from stETH, while less than 1% have gained ETH. The remaining 57% stay net neutral.

We can see that stETH is bellow peg most of the time, which leads to the difference in assets received when swapping in either direction of the ETH-stETH pair.

Conclusion

• 1117 Lido stakers have swapped from ETH to stETH, and 4071 have swapped stETH to ETH.

• Swapps from ETH to stETH can result in an increase in ETH exposure, while the opposite swap may result in a loss.

• There are more losses in proportion to the total swaps when trading stETH to ETH than there are gains from trading ETH to stETH.

• stETH is below peg most on most days, and it has been under peg for the past weeks.

Contact Data

Thank you for reading!

For any questions or feedback feel free to contact me on Discord at CarlOwOs#4288 or Twitter at @CarlOwOs1

In this direction, we see that most of the difference in expected and received assets is mostly in small amounts, 64% being losses between 0.01 and 0.1 ETH (without counting neutral nets). Overall, more stakers have lost by swapping from stETH to ETH than they have gained from swapping in the other direction.