blockworks.co
An ETP giving investors exposure to the largest liquid staking provider is the first of its kind, and comes after the market capitalization of liquid staking governance tokens has surged following Ethereum’s Shapella upgrade.
The 21Shares Lido DAO ETP — with underlying asset LDO — is listed on the BX Swiss exchange and is set to become available on Euronext Paris on Wednesday, the company revealed Monday.
The $1.6 billion market cap of Lido DAO (LDO) accounts for about half the market cap of all liquid staking governance tokens. Rocket pool (RPL) sits behind LDO with a market cap of $800 million.
LDO’s price is down nearly 22% in the past seven days.
Lido users who stake their assets receive an equal amount of staked tokens, called stTokens, that accrue rewards.
These tokens can be traded on the secondary market and used within DeFi applications — a process known as liquid staking. This allows users to tap into staking benefits without lock-up periods or high minimum amounts.
Lido is responsible for $12.6 billion in total value locked, according to Defi Llama data — roughly two-thirds of the combined $18.4 billion total value locked across liquid staking.
The market cap of Lido staked ether (stETH) has grown roughly 95% year over year from $6.47 billion in June 2022, according to Arthur Krause, 21Shares’ director of ETP product.
“Despite the well-known crypto winter, very often the most innovative opportunities appear during challenging times, and the emergence of liquid staking is a good example,” Krause told Blockworks in an email.
Liquid staking governance token performance helped DeFi’s market capitalization jump by nearly $30 billion, or 65%, in the first quarter, according to a CoinGecko report published last month.
Liquid staking governance tokens saw a 210.9% increase in market cap during the first three months of 2023 — a quarter in which Ethereum’s Shapella upgrade took place. The liquid staking category surpassed lending protocols to become the third-largest in DeFi.
There is currently about 24.7 million ETH deposited in the beacon smart contract — a roughly 25% jump since May 1.
Lido has the largest percentage of ETH staked with roughly 32% share, according to a June 9 research note by Compass Point Research & Trading analysts Chase White and Joe Flynn. Centralized exchanges, led by Coinbase, cumulatively contribute about 24% of the number of ETH staked.
The successful Shanghai hard fork and the de-risking of staking could drive “significant growth and adoption” of staking-as-a-service solutions and the overall liquid staking market, the analysts added.
“We expect that the staking [total addressable market] is set to expand considerably in the months post withdrawals, and expect that over time the percentage of ETH supply that is staked will move from ~19% to +30-40%, more inline with other [proof-of-stake] chains,” White and Flynn wrote.
Though the Lido DAO ETP is the first of its kind, 21Shares has launched products offering exposure to other DAO tokens, such as the 21Shares Aave ETP (AAVE) and the 21Shares Uniswap ETP (AUNI).
The company has also brought to market a Staking Basket Index ETP (STAKE) and its Stacks Staking ETP (ASTX) in January and April, respectively.