Lido’s stETH has become synonymous with liquid staked Ether due to it’s large market share although they are not the only protocol offering such an initiative. In this dashboard we’ll compare stETH to other ETH Derivatives like Ankr’s ETH (aETHc), and Rocket ETH (rETH).

Before we get into the data, let’s understand what ETH derivatives are and what they do. In simple terms, they are crypto asset classes that track the price of ETH in the ratio of 1:1. Liquid staking derivatives offer staking rewards unlike the original ETH supplied by users to earn network incentives.

Liquid staking derivatives like stETH are easily tradeable as opposed directly staked Ether which cannot be withdrawn months after the merge. Also, holding staking derivatives is more profitable in the long term as rewards compound.

Between stETH, aETH, and rETH, there has been 4.44ETH owned by 106 thousand unique users in return for their respective liquid staking derivatives. Out of this total, about 100 thousand own 4.28M of stETH representing 96.4%. This clearly shows that stETH is a monopoly in the liquid staking business.

How did stETH dominate the liquid staking business model? In the sections that follow, we shall explore metrics such as trade volume, price action, and accessibility as the possible reasons for stETH’s dominance.

Monthly buying volume refers to the total amount of the derivative token that is bought within a particular month. As we can observe from the chart above, the volume for stETH has generally been higher than that of rETH, and aETH. In the month of May 2022, the gap was much more significant.

What could have been the reason? Was stETH trading at a discount as compared to the others? Let’s look at the price action of the three derivatives.

As you can see, Ankr’s ETH (aETH) has been trading at a discount far below that of stETH and rETH for the most part of May, 2022. Therefore we can conclude that users were not buying stETH over aETH, and rETH because the price was better.

If it was not about price, then what was it? Is it accessibility? We shall explore accessibility in the next chart in terms of the number of pools available to users to trade said derivatives.

We can see from the bar chart above that aETH has 9 pools, and rETH has 10 pools, while stETH has only 5 pools. This means stETH is the least accessible amoung the three.

What we can learn from this piece of analysis is that, stETH did not dominate because it had a superior product that was cheaper/stable or was easily accessible. These other factors might be the reason:

• First mover advantage; Lido was the first to innovate in this space so it is easy for most people to think they are the only ones.
• Better marketing and partnership; Lido has partnered with various protocols including Terra’s Anchor protocol to integrate liquid staking. I believe this move set them up to become the go-to name for liquid staked ETH derivatives.

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