Lido dominates on Ethereum, but struggles on Solana. Why?

Lido has a lead that looks ‘very difficult to beat’ on Ethereum, but doesn’t seem to have traction on other chains

article-image

Lightspring/Shutterstock modified by Blockworks

share

“For those of us who’ve been paying attention to crypto over the last couple of years, hacks are still incredibly real,” says Mike Ippolito.

Security in crypto ecosystems is often judged by what’s called the Lindy effect: The longer a technology hasn’t failed, the more likely it is to continue to not fail. 

With all the potential value swirling around in liquid staking, such ecosystems tend to be attractive targets for unscrupulous attacks. Lido stands alone as the liquid staking leader on Ethereum, at least in part thanks to its history of maintaining solid security in a self-fulfilling Lindy loop. 

“In order for you to justify not using the product or service of a leader,” Ippolito says on the Bell Curve podcast (Spotify/Apple), “the [competing] product has to be an order [or] two orders of magnitude better, and there’s just not that much to really differentiate within liquid staking.”

It’s this “Lindy-ness” that leads to liquidity, Ippolito says, which is ultimately what users want from a liquid staking protocol.

Solana’s liquid staking game 

Due to the history of successful security on Lido, Ippolito expects it to remain the dominant liquid staking system on Ethereum. But he doesn’t necessarily expect this pattern to carry over to other blockchains. “Lido made a pretty unsuccessful play into Solana a while ago,” he says.

Referring to a conversation with Chorus One chief information officer Xavier Meegan, Ippolito explains that Lido’s network effects on Ethereum failed to travel to the Solana ecosystem. He expects to see a liquid staking provider eventually “take off” on Solana in a similar way that Lido has on Ethereum. “Maybe that’s JitoSOL. Maybe it’s Marinade. I think they’re the front-runner today,” he says.

In the conversation Ippolito had with Meegan, the CIO described the chicken-egg problem that Solana faces with liquid staking popularity, currently experiencing much lower DeFi traffic and total value locked (TVL) than Ethereum enjoys. 

But the lack of “Lindy-ness” — a long history of network security — coincides with more opportunities for growth in a younger system that sees more competitors vying for dominance in a less established market, Meegan said.

Associate at the advisory and investment firm Reverie, Myles O’Neil doesn’t expect to see any “big technical disruption” that would unseat the existing incumbents in liquid staking’s near future on Ethereum. He suggests that yield is one area in which up-and-comers could attempt to compete, but says it’s “unclear exactly where that stacks up versus brand, security and Lindy.”

Offering one or two extra percentage points yield does not “move the needle enough to unseat Lido,” O’Neil argues, noting that the service’s liquid staking token (LST) is “not the highest yielding LST” by a large margin, yet it has managed to maintain dominance in Ethereum.

“I don’t see a lot of winners here,” O’Neil says.

Lido is really well positioned for Ethereum,” he says, adding that he is less certain of how the liquid staking game plays out on Solana. “It is a little bit more fragmented over there,” he says, with more possibilities for competition.

Ippolito notes that liquid staking on Solana won’t necessarily ever attract the same kind of activity as it does on Ethereum. A major reason for this difference, Ippolito says, is the blockchain’s unique ability to be more liquid than Ethereum in the first place. “The more the protocol does on its own, the less opportunity there is available for external liquid staking providers.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

Unlocked Advisory-min.png

Research

This report distills Blockworks Advisory’s research on incentive programs and their analysis, offering a foundation for designing future initiatives and advancing industry-wide standards. By highlighting key lessons and methodologies, we aim to empower protocols to make informed, data-driven decisions.

article-image

Data came in a bit mixed, but is overall consistent with the 13-week moving average

article-image

Austin Federa had been at Solana Labs and Foundation for nearly four years

article-image

There’s a lot of confusion as to why the Fed might still be cutting rates despite what looks to be an economy doing pretty well

article-image

More momentum could drive BTC past the six-figure price mark — albeit not without volatility

article-image

The HAWK token crashed 87% around 30 minutes after launching

article-image

The company did about 2.5 times the amount of crypto-backed collateral financing in November compared to the rest of 2024, exec says