Crypto Staking Regulation Benefits Lido DAO Most?
With exchange staking constraints, the Ethereum Shanghai update may affect the staking ecology.
Lido, the largest liquid staking mechanism, is decentralised, making it difficult for regulators to control its actions.
Lido stands to gain more from the current situation following the impending Ethereum upgrade.
The planned Ethereum Shanghai upgrade may result in significant changes to the staking ecosystem given the recent legislative limits on crypto staking on exchanges. While it's suggested that unstaking ETH would drive down the price of Ethereum, it's also possible to make the case that many stakeholders would decide to restake for higher rewards. Hence, assets may be diverted to Lido DAO when the ETH is unstaked from Kraken.
Coinbase vs. Lido
In terms of size, Kraken is third behind Lido and Coinbase. It's interesting to note that Lido is also the biggest liquid staking protocol, making it challenging for regulators to impose restrictions on its activities because of its decentralised structure. On-chain data shows that 7.42% of all ETH staked across platforms is in Kraken's Ethereum staking pool. Whereas Coinbase comes in second at 12% and Lido comes in lead at 29%.
When the Kraken's pool is unstaked after the Shanghai upgrade, these numbers may drastically flip in Lido's favour. After the SEC settlement with Kraken, even controlled exchange Coinbase may not be trusted by all traders. Brian Armstrong, the CEO of Coinbase, was the first to issue a warning that the SEC would impose a general ban on staking. Lido therefore has a greater chance of profiting from the current circumstances following the imminent Ethereum upgrade.
