The Ethereum network is preparing for its Shanghai hard fork, scheduled for April 12. This will enable validators to withdraw staked ETH from the Beacon Chain to the Ethereum Virtual Machine (EVM). As over 18 million ETH is currently staked, valued at over $33 billion, the possibility of flooding an already unstable market is enough to prompt holders to prepare to sell the news once withdrawals are enabled. Liquid staking derivatives (LSDs) are a new financial instrument, and activity around them can gauge market sentiment post-withdrawals. LSDs allow staked assets to be traded on secondary markets, giving stakers access to their staked ETH’s value while securing the network.
The five largest Ethereum staking providers, Lido, Rocket Pool, Frax, Stakewise, and Coinbase, offer their own unique flavors of LSDs, with Rocket Pool’s rETH trading at a premium due to its reputation as the most decentralized staking solution. However, LSDs from the two largest staking providers, Lido and Coinbase, trade at a discount to spot ETH, with Lido’s LDO struggling to reach its early March high. Frax’s Ether saw the most significant increase in total value locked over the last 30 days, compared to the other top 10 staking providers, at 14% growth for a $244 million valuation.