Lido revenue down 40%: market share holds as ETH staking demand rises
Lido has reported weaker finances despite strong overall ETH staking demand. In its 2025 annual report, Lido revenue fell 23% year-on-year to $40.5M (from $52.4M in 2024), with the foundation citing a challenging macro environment and intensifying competition.
The key issue behind Lido revenue down is “rewards compression,” driven by staking outflows and a network-wide decline in staking APR. Lido said outflows were amplified by a structural shift toward exchange and institutional staking, reducing the segment where Lido has category leadership. Even as broader staking demand rose, Lido’s share was pressured: March outflows were led by Lido, with nearly 310K ETH leaving the protocol.
On the demand side, ETH staking reached record levels—about 30.7% of total ETH supply (38.2M staked ETH). The increase was attributed to Spot ETH ETFs and treasury firms enabling yield features for investors. However, Lido’s outflows did not ease in 2026.
Still, Lido maintained a dominant market share of 24% (8.8M staked ETH). For 2026, it plans to diversify, including expanding institutional distribution for low-risk staking segments (e.g., WisdomTree Physical Lido Staked Ether), scaling “Lido Earn,” and growing its validator marketplace.
Lido also outlined “stronger economic alignment” between protocol performance and LDO. A proposal would fund automated LDO buybacks via a treasury surplus fund, with a $10M annual budget floated last November. A formal plan is expected in Q2 2026, though LDO’s market reaction remains uncertain.
Overall: Lido revenue down 40% signals margin pressure, even as ETH staking demand hits new highs.
Bearish
This news leans bearish for traders because it highlights Lido revenue down (to $40.5M) alongside evidence that staking outflows are still occurring even as total ETH staking demand hits records. When a dominant staking provider reports sustained revenue compression, it can pressure sentiment around LDO, especially since LDO has already been heavily down from its H2 2025 high.
That said, the market share holding at 24% and the rise in overall ETH staking (driven by Spot ETH ETFs and institutional/yield demand) are stabilizing positives. Similar dynamics have appeared in past protocol/DeFi revenue cycles: when incentives compress and users rotate to newer rails (e.g., centralized or institutional staking), revenue metrics can fall faster than TVL/usage, creating near-term downside even while long-term demand for the underlying asset (ETH) remains strong.
Short term, traders may expect continued volatility in LDO and relative underperformance versus broader ETH staking beta due to “outflows + APR compression.” Medium to long term, the proposed Q2 2026 buyback plan and institutional diversification could improve economics, but until execution details and market impact are clearer, the immediate trading read-through remains cautious—hence a bearish bias rather than neutral.