Lido Dominates Ethereum Liquid Staking Landscape Following Pectra Upgrade
The Ethereum network has seen significant changes in its validator queue landscape, particularly since the launch of Pectra in May 2025. The entry queue currently holds a record-breaking 2.6 million ETH, while the exit queue has fallen to 0 ETH, with a peak of 2.67 million ETH in September 2025. This shift means that entering the network now requires a 45-day wait.
Pectra introduced several key upgrades, including EIP-6110, which allows validators to hold up to 2,048 ETH and automates reward compounding. It also uses EIP-7002 to enable users to withdraw ETH or exit validators independently of their node operator. The network has implemented a limit on churn to 256 ETH per epoch, approximately 57,600 ETH per day, which scales with the total validator count.
One of the main beneficiaries of Pectra is Lido, which leads in liquidity and DeFi integration. With 8.9 million ETH held by the protocol, it accounts for a massive 62% of the liquid staking market share and roughly 23% of all staked ETH. Lido's dominance stems from its use of a rebasing model, where users' balances increase daily as rewards accrue.
Lido takes a 10% fee from staking rewards, splitting it between node operators and the DAO treasury. The protocol has also implemented a buffer to fulfill small requests under 1,000 stETH within a single day. stETH occupies the dominant collateral position on Aave V3, with over $2 billion in supplied assets.
However, Lido's concentration of power raises concerns about protocol risk and ecosystem-level concentration risk. Stakers rely on a smart-contract system and an oracle reporting structure, which creates additional risks.