I would like to open a strategic discussion regarding Lido’s current monetization and revenue capture model, specifically looking at how we are lagging behind newer Liquid Restaking Protocols (LRTs) like Ether.fi in terms of protocol net revenue generation—despite our massive lead in TVL.
The Core Paradox: High TVL, Low Capture
While Lido remains the absolute titan of Ethereum staking with a commanding TVL advantage, our protocol revenue efficiency tells a different story. If we look at recent performance metrics comparing Lido and competitors like Ether.fi, a concerning trend emerges:
Ether.fi is capturing significantly more net revenue for its protocol while managing roughly 1/5th of Lido’s TVL. This means their take-rate efficiency per dollar of TVL is vastly superior.
Why Lido is Falling Behind in Revenue Efficiency
The 50/50 Node Operator Split:
Lido takes a 10% fee on staking rewards, but 5% goes directly to external Node Operators. While this ensures a robust and decentralized validator set, it structurally caps Lido’s DAO revenue potential in a low-yield Ethereum environment (where baseline PoS yields hover around 3-3.5%).
The LST vs. LRT Yield Layering:
stETH is a “single-crop” yield asset. LRTs like Ether.fi (eETH) have successfully commercialized multi-layered yield. By compounding base staking with EigenLayer restaking, AVS rewards, and structural vaults (Liquid Vaults), they create multiple cash-flow touchpoints to tax, which users willingly pay for due to higher overall APY.
Evolution into an On-Chain Neobank: Ether.fi is aggressively diversifying away from being just a middleware staking protocol. Products like Ether.fi Cash (debit cards) and automated portfolio management generate structural fees entirely uncorrelated to Ethereum’s baseline consensus layer rewards. Lido, meanwhile, remains heavily dependent on a single revenue vertical.
Proposed Areas of Research
To maintain our market dominance not just in TVL, but in financial sustainability and token value capture, I believe the Lido community needs to urgently address the following questions:
Can Lido safely expand into the restaking/AVS market without compromising our core security alignment with Ethereum consensus? (e.g., accelerating initiatives like Lido Alliance).
Should we explore structural yield products? Can Lido native “Vaults” automate stETH deployment into DeFi/L2s to capture management or performance fees for the DAO?
Is it time to rethink the LDO token utility? How can we use this revenue discussion to build better value accrual mechanisms for LDO holders as the staking landscape matures?
I look forward to hearing your thoughts, data corrections, and strategic ideas on how Lido can adapt to this new era of hyper-efficient capital extraction.
Comparing Lido’s revenue efficiency directly to ether.fi overlooks the core trade-off between base collateral and restaking risk.
stETH is the foundational, liquid collateral across DeFi precisely because it doesn’t take on exogenous AVS slashing or restaking contract risks. The extra yield from LRTs isn’t pure operational efficiency—it’s a risk premium stacked on top of points and incentives.
At the same time, look at the underlying validator set. Most LRT protocols still rely heavily on a small group of permissioned operators, while Lido is investing in long-term decentralization through CSM and permissionless home staking.
Chasing short-term yield at the expense of decentralization or tail-risk compromises the base layer. The right path isn’t turning stETH into an LRT, but leveraging modular designs like stVaults so anyone wanting restaking exposure can opt in without pushing risk onto the core protocol
What short-term profit are you talking about? As it stands, only the stakers and the team get any profit. LDO holders just exist.
The buyback system makes no sense to me, either. After the NEST launch announcement, I saw mostly negative comments. $50k/day ($10m/year) is a pitifully small amount for a project of this scale.
At this stage of the project, the tokenomics are also completely baffling to me. Why have 1 billion LDO when, in reality, decisions are made based on a consensus of 50 million? Plus, the team completely killed off any utility LDO might have had when they introduced dual governance.
It feels like the team simply ignores any posts and feedback that don’t come from their close circle of developers.
Meanwhile, the number of delegates never changes—it’s always the same people voting—and the project simply can’t attract new ones because nobody is even interested in holding LDO.
Meanwhile ETHFI
1.Users can stake ETHFI directly on the platform. Doing so earns loyalty points, upgrades membership level, and unlocks extra token allocations and ecosystem perks.
2.Normal buybacks
3. ether.fi has expanded far beyond simple liquid staking into a full-fledged crypto-financial ecosystem
It is high time to move to the next level instead of just treading water since 2020. Sure, the project has a TVL of 17B, but so what? If EIP-8363 gets implemented, the whole thing could fall apart—all while others are expanding their markets and development. And even if it doesn’t get implemented, what will the team do? Keep doing everything “exclusively for stakers”? Eventually, those very stakers will leave for more advanced projects.
I see where you’re coming from, but we’re really looking at two fundamentally different products.
ether.fi is built like a fintech app focused on rewards and loyalty perks, while Lido operates as base plumbing for Ethereum. Both have their place in the ecosystem, but they serve different goals. Appreciate the discussion!
@Max0x and contributors, the revenue efficiency paradox highlighted here is accurate, but proposing an evolution into a “consumer neobank” (debit cards, retail apps) is a strategic error for protocol-layer infrastructure. Base plumbing should never bloat its operational overhead to compete with fintech consumer apps.
The root cause of Lido’s low revenue capture is structural: the 50/50 node operator split caps the protocol’s take-rate, and stETH is constrained to a single-crop yield in an era of hyper-efficient capital extraction.
However, trying to solve this by forcing core stETH to take on exogenous AVS slashing risks (becoming a monolithic LRT) introduces tail-risk that threatens Lido’s position as the undisputed risk-free anchor of Ethereum.
The Architectural Solution: Native Yield Routing Vaults
Lido can capture multi-layered restaking revenue without compromising base consensus security by implementing Modular Smart Yield Vaults:
Decoupled Risk Pods: Instead of forcing all stETH into EigenLayer/Symbiotic, Lido deploys isolated, opt-in smart contract “Vaults” that wrap stETH to capture AVS and L2 restaking yields on behalf of users who explicitly desire that risk profile.
Performance Fee Capture: These native vaults charge a localized performance/management fee (e.g., 10-20% of the stacked yield), routing that revenue directly back to the DAO treasury to solve the LDO value-accrual deficit without touching the core staking yield split.
Preserving Base Plumbing: Core staking remains safe, decentralized, and untouched by AVS slashing, while the DAO captures the multi-layered cash flows that users are currently migrating to Ether.fi to find.
To fix the capture problem, Lido doesn’t need a marketing pivot or a neobank app. It needs Modular Smart Vault Architecture.
As an Independent Data Architect currently scoping capital efficiency and impact oracles for L2 treasuries, I assert that modular yield routing is the only mathematically sound path to scale DAO revenue without breaking the base layer.
From an infrastructure standpoint, modular vaults are excellent, but I wouldn’t overlook parallel services, considering that DAOs unlike many fintechs have a solid user base at their disposal, and can more or less estimate how many will use that service
In any case, I’m waiting for the live stream on the 27th; I’m sure that the constructive ideas are not be completely ignored by the team.
The Core Paradox: High TVL, Low Capture
Annualized Protocol Revenue: ~$38.2M
