The economic reality of Ethereum staking shifts

Lido’s structural crisis and recovery plans

Lido’s revenue dropped 23% in 2025. The protocol’s total revenues fell to 40.5 million dollars, down from 52.4 million in 2024, because net staking outflows reduced ETH deposits and the compression of yields across the Ethereum network lowered fees. This 12 million dollar loss happened as the market became more complex. I see the impact of these outflows in the market share collapse, where Lido’s control of staked Ethereum fell from 32% in 2025 to 22.82% in March 2026. In the week preceding the 2025 report, 150,000 ETH left the protocol. The APR also fell from 13.06% at the start of 2025 to 2.62% in March 2026. Lido reduced its workforce by 15% in August 2025. The protocol also plans a $50 million LDO buyback if the price remains below 2.00 dollars. One proposal aims to turn LDO into a productive asset by allocating 20% to 40% of total protocol revenue to stakers. This could deliver an APY of 8% to 14% depending on the supply staked and LDO price. Unbonding periods for these stakers require 7 to 14 days, or an instant unstaking option with a 1% to 3% penalty. To manage rewards during the CMv2 migration, the Rewards Share Committee must manually process payments for Node Operators in the Extra Effort and Client Team tiers. The committee uses an Easy Track setup to access stETH from the DAO Treasury with a technical security limit of 3,000 stETH per year. The goal for Lido’s modular ecosystem is to reach 1 million Ethereum staked by the end of 2026 through stVaults and ValMart. Lido is targeting the institutional segment through the WisdomTree ETP.

Competitor pressure and fee dynamics

Rocket Pool faces a difficult period for its minipool infrastructure. The count of pending or active minipool providers declined 1.4% to 25,303, which is a 44% annualized decline. I also note that rETH supply declined 41% on an annualized basis as of March 2024. While the node operator count grew 0.7% to 3,612, the shrinking minipool count creates a different economic reality for the protocol. Rocket Pool still has over 3,200 worldwide node operators who have staked more than 810,000 ETH, which is over 3% of all Ethereum staked. Joining as a node operator requires 8 ETH. Meanwhile, Coinbase targets the institutional market with specific pricing that forces liquid staking protocols to compete on more than just decentralization. Coinbase Custody provides a 50 bps annualized fee with a $500,000 minimum balance.

Coinbase Institutional bills through product-specific commercial packages. You should expect that Prime and trading costs require direct sales engagement. Coinbase also holds a $320M commercial crime policy covering hot and cold storage assets. Coinbase Custody is a NYDFS-regulated qualified custodian with segregated client assets and no rehypothecation. Coinbase Custody also uses SOC 1 Type II and SOC 2 Type II audits by Deloitte.

The institutional shift

Institutional staking grew from 25.9% to 35.3% during the first half of 2026. WisdomTree’s Physical Lido Staked Ether ETP grew 23% in the first half of the year to reach 21,000 ETH. The stVaults TVL reached 11.5K ETH by July 31. I think the shift toward institutional products like the WisdomTree ETP, which holds 36 million dollars under management, shows where the market is moving. Anchorage integrated stETH as the first federally chartered US bank to custody and mint wstETH. Coinbase also holds status as the custodian for eight of eleven spot Bitcoin ETF mandates. Rocket Pool reports that its node operators are economically aligned to perform well for stakers. The stVaults Committee manages rewards for stVaults growth initiatives. Does the rise of these institutional players leave enough room for smaller, decentralized protocols to maintain their specialized niches? I think the shrinking minipool counts at Rocket Pool and the massive liquidity shifts at Lido indicate a market in total realignment.