Liquid staking is the way most people now earn staking rewards on Ethereum without locking their coins away. You deposit ETH with a protocol, it stakes on your behalf, and you get a token back that keeps earning and can still be traded, lent or used as collateral. That token is called a liquid staking token, or LST, and Lido's stETH is the best known one.

At AnkhLabs we spend a lot of time on how crypto products find users, and liquid staking is a useful case because the product is close to a commodity. Every Ethereum staking protocol earns from the same network rewards, so the yield gap between them is small. What separates the leaders is trust, reach and how many places the token is accepted. This piece covers the state of the market in 2026, what changed with staking ETFs, and what that means if you are marketing a staking product or building on top of one.

What is liquid staking and how does it work?

Staking on Ethereum means locking ETH with a validator, a computer that helps confirm transactions and earns rewards in return. Running one yourself takes 32 ETH, some technical work and a willingness to wait in a queue when you want your coins back. Liquid staking removes those barriers. A protocol pools deposits of any size, spreads them across professional node operators and issues a token that represents your share of the pool plus its rewards.

The token is what makes it liquid. If you hold stETH you can sell it on a decentralised exchange, post it as collateral on a lending market or move it to a layer 2 network, while the ETH underneath keeps earning. Lido takes 10% of staking rewards as its fee, so holders keep 90%.

The rewards themselves have fallen as staking has grown. Bitquery calculates that stETH paid 5.26% a year in 2021 and 2.38% a year from January to September 2026, after Lido's fee. Over the same stretch the total amount of ETH staked rose from about 4.06 million to 43.7 million on 1 October 2026. More stakers share a similar pool of rewards, so each one earns less.

How big is the liquid staking market in 2026?

As of 6 November 2026, DefiLlama's liquid staking category tracks about $51.1 billion in total value locked across more than 300 protocols on many chains. Lido leads with about $21.8 billion, roughly 43% of the category. The rest of the top ten shows how varied the market has become.

Source: DefiLlama liquid staking category, as of 6 November 2026. Values move with token prices.

Two things stand out. First, the second biggest name is an exchange. Binance can offer its staked ETH token to users who already keep coins on the platform, which is a distribution advantage no independent protocol can match. Second, liquid staking is no longer only an Ethereum story. Solana has a deep bench of staking tokens, and Kinetiq's kHYPE shows the model spreading to newer chains such as Hyperliquid, whose growth we covered in our Hyperliquid growth strategy piece.

Is Lido losing its grip on liquid staking?

It depends on which share you measure. Against all staked ETH, Lido has slipped. 4Pillars found that Lido's share fell from 32.5% in May 2022 to 20.7% as of June 2026, while the ETH staked through Lido grew from about 4.1 million to 8.6 million. Lido did not lose deposits. The rest of the market simply grew faster.

Within the simple liquid staking segment, the picture is very different. Lido's own May 2026 tokenholder update says it holds about 90% of that segment. The growth came elsewhere, in what Lido calls delegated staking, where institutions such as Grayscale and the treasury company BitMine stake directly with operators. The same update admits that "the annual targets set in December 2025 are no longer achievable" and reports that stVaults, Lido's new product for institutions that want custom setups, held about 5,500 ETH against a target of 1.05 million ETH.

Lido is responding with distribution and new products. On 15 October 2026 it enabled direct ETH staking from Arbitrum, Base, Linea and Optimism, so a user on one of those networks can stake in one transaction and receive wstETH, the wrapped version of stETH, without bridging by hand. The lesson for any staking product is that the protocol with the best reach beats the protocol with the best yield, because the yields barely differ.

What did staking ETFs change?

The biggest shift of the past year is that staking now reaches investors who will never open a crypto wallet. BlackRock's iShares Staked Ethereum Trust, ticker ETHB, began trading on Nasdaq in March 2026 with just over $100 million in assets. According to CoinDesk, the fund stakes 70% to 95% of its ether and passes about 82% of the rewards to investors through monthly payouts.

That fund stakes ETH directly through providers rather than holding a liquid staking token. The first US fund built around a token was meant to be VanEck's Lido Staked ETH ETF, filed on 16 October 2025. On 14 October 2026 VanEck asked to withdraw it, saying it "does not intend to proceed with the planned distribution" of the shares, and Cointelegraph reported that no reason was given.

The rules have also become clearer. On 5 August 2025 the SEC's Division of Corporation Finance published a statement on certain liquid staking activities, which took the view that "Staking Receipt Tokens are not offered and sold as part of or subject to an investment contract" when the facts match its description. As Jones Day noted, it is staff guidance that covers administrative activities only, not anything that adds a promise of extra returns. For the wider context see our piece on institutional crypto adoption.

Where liquid staking went wrong in 2026

The riskier end of the market had a hard year. Lido's May update describes a group it calls APR Maxis, users who chase the highest yield by stacking restaking and borrowed ETH on top of their staked tokens. That group shrank sharply after EigenLayer cut its restaking incentives and after the Kelp DAO incident in April 2026, when, according to the update, a LayerZero bridge exploit left Kelp's restaked token rsETH short of its backing by more than 100,000 ETH.

The spillover reached Lido's own products. Its EarnETH vault had about $20 million of direct rsETH exposure and was frozen for 27 days. Lido reports that final depositor losses were 0% after an industry rescue effort raised about 132,000 ETH and Lido DAO contributed 2,500 stETH. Even so, EarnETH's deposits fell from about 111,000 ETH to 58,000 ETH. Lido's total deposits fell only about 5% over the same period, so the plain product held up far better than the complex one.

That is the clearest marketing signal of the year. Yield that comes from stacked incentives brings users who leave as fast as they arrive, a pattern we described in our article on liquidity mining.

How are liquid staking tokens marketed?

Because the base yield is close to identical everywhere, liquid staking tokens compete on four things. Each is a marketing choice as much as a product choice.

• Security record as the headline. Lido leads with the claim that no staking user funds have been lost since it launched in 2020, and it lists outside ratings from firms such as Credora and StakingRewards. For a product that holds billions, a clean history is the message. It is also why a single incident can undo years of trust, a theme in our piece on exchange security after the Bybit hack.

• Integrations as distribution. A staking token is only as useful as the number of places that accept it. Lido's update notes that SparkLend's high-borrowing ETH mode accepts only wstETH as collateral. Every listing on a lending market, exchange or layer 2 is a new reason to hold the token, so business development is the main growth channel.

• Owning the front door. Exchanges such as Binance put staking one tap away for existing users, and wallets do the same. Independent protocols answer by meeting users where they already are, as Lido did with layer 2 staking.

• Incentives, used carefully. Points and token rewards still help a new staking token get its first deposits. They work best when rewards follow sustained deposits rather than one-time spikes, which is the logic in our article on crypto points programs.

What we'd tell a founder in liquid staking

If you are launching a staking token, or a product that uses one, three things matter more than the headline rate.

First, sell the boring parts. Explain where the ETH goes, who runs the validators, how withdrawals work and what happens in a bad week. Most people who would hold a staking token do not know what a validator is, and copy that removes jargon converts better. For Zoop we rewrote the onboarding copy to remove crypto terminology at the wallet step, and the programme reached 2M+ signups and 500K+ wallets connected.

Second, plan integrations before campaigns. A list of lending markets, exchanges and wallets that will accept your token on day one does more than any launch thread. If you use incentives, tie them to deposits that stay. Our Mythical Forest programme tied rewards to sustained activity and reached 1M+ users onboarded. More examples are in our case studies.

Third, be honest about yield. Advertise the real network rate and say plainly where any extra comes from. The users who chased stacked yields in 2026 were the first to leave, and the ones who stayed wanted something simple. Our product marketing work starts from that kind of positioning.

If you are planning a liquid staking launch and want a second opinion on the go-to-market, talk to AnkhLabs.

The bottom line

Liquid staking is mature now. The yield is set by the network, the rules in the US are clearer than they were, and big funds offer staking to people who never touch a wallet. That leaves trust and reach as the real battleground. Lido's slipping share of all staked ETH and its strong hold on simple liquid staking tell the same story from two sides, and new entrants should read it before they spend a single dollar on incentives.

This article is for information only and is not investment or legal advice. Figures are as of 6 November 2026 unless stated.