Analyzing Lido’s staked Ethereum: stETH

Hello community, if you have checked my previous content, you may know that stETH is a token that represents the staked Ether in Lido, combining the initial deposit value with rewards. Thus, stETH is a token that allows you to earn DeFi yield rewards.

Basically, it is the liquid token for betting ETH staked in the Eth2 contract with which users who bet their ETH in the Eth2 contract through Lido will receive the equivalent liquid token in the form of stETH. Today, we will talk about its metrics and how stETH is being used by the community, as well as how holders are confidents with it.

So, first of all, we will analyze the daily volume of stETH. To do that and to have a global vision of it, I have checked through Flipside Crypto app and its database the daily stETH transactions volume during 2021.

https://velocity-app.flipsidecrypto.com/velocity/visuals/a25bf12b-689b-4970-8d90-e2799196c8a5/91863551-69bb-47d5-8f3a-3a59113d9b91

In the above chart, it can be seen the different transactions that have been made throughout the year, from January 2021 to this October. As you can see, there is a clear increase in transactions as well as an inflation of the volume of transactions that have been made. Thus, we see that there was a small momentum in Q1 of the year, but that in April it was declining. Then in mid-May transactions picked up a little bit again and there was a strong point before Q3 of the year, at which point the average transaction volume was up from the first half of the year. Going into August, strong transaction volumes started to come in, peaking right at the beginning of September. At the beginning of this last four-month period of the year, it seems that the volume has risen considerably and does not seem to be going down. A good sign for the stETH, which seems to have found its usefulness.

Another important aspect to take in to account to for stETH metrics analysis are the staking characteristics. For this reason, I have analyze the number of stETH stakers over time and the current number of people that are staking stETH. In this case, I have downloaded the Flispide Crypto data and I have created my own code in Python in order to obtain this charts.

The bar on the left shows the total number of stakers over time. The figure is around 800, which for a period of time from January to the beginning of October is not bad at all. However, if we take into account the users who have stopped staking during this same year, we see that the current number of stETH stakers within the platform is 126. Depending on the average volume of the stakers, we can know if it is enough to keep the value of the token safe.

On the other hand, we can see in the chart below the evolution of the stakers, another data that indicates the interest of the community towards the token. This is important because if we see that the number of stakers increases progressively, it would be a bullish signal for the token.

As we can see, the chart is not only showing an increase in the total number of stakers over time, but the increase is practically exponential. During the first half of the year there is a constant change of incoming and outgoing stakers, but after a certain point the number of incoming stakers starts to be higher than the removers and becomes exponential. This tells us that the token has acquired its usefulness and that people are starting to trust it.

Finally, we will analyze the percentage of stETH converted to bETH and bridged to Terra. For this task, I have checked through Flipside Crypto app and its database different variables taking into account the corresponding smart contracts and addresses, getting the bridge with Terra.

https://velocity-app.flipsidecrypto.com/velocity/visuals/95396695-bd12-429b-97d4-d34460999fcf/6cce1006-621d-4652-af22-9917300d74fc

In this case, we can see the amount of stETH that has been exchanged for bETH in the last few months. We can see a large increase during the initial period, but a sharp decrease in the middle of the period, being more considerable at the end of the stage. This could be due to the fact that most of the stETH stakers are keeping their tokens and the exchange between sETH and bETH is decreasing due to this fact. More information would have to be obtained or explored in depth to find out.

https://velocity-app.flipsidecrypto.com/velocity/visuals/107d3525-e8f4-4ae3-b945-42448a54546f/6cce1006-621d-4652-af22-9917300d74fc

The same thing is happening for the volume of stETH swapped to bETH, the image looks like the previous chart, indicating a downtrend over the period.

https://velocity-app.flipsidecrypto.com/velocity/visuals/c654e439-a7ea-4c7a-97d9-6abe4c64f70d/6cce1006-621d-4652-af22-9917300d74fc

Finally, talking about the percentatge of stETH to bETH, we can see how it shows a different graph than the other two. In this case, we see a very parallel and quite constant graph, obtaining an average of 3% percentatge of stETH to bETH. We see some peaks in the middle of the period but they are not decisive as the trend at the end is still quite flat.

As a final conclusion, we can say that the stETH token is very interesting and that through this exploration of the different metrics studied we can say that it is becoming more and more disturbing for cryptocurrency investors. It seems that they are betting to holde the token and not to swap it, something that gives credibility to the coin and gives it some stability and security.

Author: Adrià Parcerisas

Email: adria.parcerisas.albes@gmail.com

Ph.D. ML and AI | Blockchain Technology and Cryptocurrency Expert