Ethereum is about to get crushed by liquid staking tokens

). The LST market is already worth approximately $17 billion, and it has grown continuously since Ethereum’s Merge.

The new capacity to stake ETH and earn yield means that those who hold ETH today must decide: Should they provide liquidity with their ETH and hope to earn fees, or would they be better off staking that ETH and earning a surefire yield? The argument that LSTs will replace ETH in DeFi is evident: Any LP who chooses to supply ETH to an AMM instead of an LST is sacrificing roughly 4% APR. What kind of sense would that make for folks looking to maximize their yield?

from 4.9 million to 8 million, representing more than 30% of all staked ETH. The Swell Network, which launched in mid-April, already has more than 43,000 ETH staked on its platform.This shift could mean LSTs will take over as the dominant asset in decentralized exchanges and eventually replace ETH entirely as the go-to token in crypto.

Since the Merge, ETH can now be staked to produce a roughly 4% annual yield, depending on factors of network activity, total Ethereum staked, number of validators and the value captured by maximum extractable value.

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