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Ethereum Staking Pools: Who Runs the Largest Ones?

One DeFi staking pool and three centralized crypto exchanges account for almost two-thirds of ETH securing the network ahead of the merge.

4 min read
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Ethereum staking pools have been a popular, if somewhat contentious, way for investors without the funds or know-how to get in on network validator rewards.

And there’s been plenty of time to get involved. The merge, which is scheduled to begin next week, has been in the works for years.

The merge will shift Ethereum’s current proof-of-work mining model—which requires lots of power to run the mining rigs that process transactions—to a proof-of-stake consensus system that’s expected to use over 99% less energy, according to the Ethereum Foundation.

When the Ethereum mainnet makes that transition, it’ll be validators, not miners, who verify transactions and add them to the blockchain. Like miners, those validators will earn rewards for helping secure the network.

But becoming a validator has a high cost of entry and involves a lot of risk. Investors would need to deposit 32 ETH collateral (worth approximately $52,000) to become a validator and maintain hardware and software to avoid downtime penalties. 

That’s given rise to staking pools. 

To participate, people lock up their Ethereum with a third party, like Lido Finance or Coinbase. Those entities use the funds to set up validators and handle the overhead of running nodes. In exchange, they take a cut of the rewards and pass on the rest to depositors.   

As of Friday afternoon, there are more than 422,000 unique validators with $22.3 billion worth of Ethereum (13.5 million ETH) staked on the Beacon Chain, according to blockchain analytics firm Nansen. Thirty percent of staked ETH is controlled by Lido Finance, 15% by Coinbase, 8% by Kraken and another 7% by Binance. 

Altogether that’s more than 60% of staked Ethereum sitting with four entities.  

To understand the implications, think of staking pools as real estate investment trusts. A REIT allows people to get exposure to investment property without needing to buy it on their own and split the income.

But if four REITs controlled 60% of all housing, it’s easy to imagine what it could do to the market if even just one of them decided to block certain people from buying and renting houses. 

That’s why staking pools have drawn so much attention ahead of the Ethereum merge—single entities controlling large groups of validators undermines the idea of security through decentralization.

Here’s a closer look at the largest Ethereum staking pools as of September 2:

Lido Finance, 4.2 million ETH

Lido Finance and its Staked ETH (stETH) have far and away been the most popular staking pool. Lido launched the liquid staking token in late 2020, right before the Beacon Chain was created. The liquid nature of the token means that ETH depositors receive stETH and can sell, trade, or lend out the stETH while their ETH remains locked up with Lido. 

stETH is held by more than 98,000 unique wallets, according to Etherescan.

Coinbase, 2 million ETH

Coinbase has offered Ethereum staking since April of last year. But two weeks ago, the company debuted a liquid staking option: Coinbase Wrapped Staked ETH (cbETH). It behaves similar to the way stETH does and can be used as collateral in decentralized finance lending protocols. As of Friday, cbETH has a market cap of $936 million, according to CoinMarketCap, and is held in 880 unique wallets.

Kraken, 1.1 million ETH

Back in December 2020, after the proof-of-stake Beacon Chain launched, Kraken announced that its clients had staked 100,000 ETH ahead of the merge. That amount has grown tenfold. Unlike Lido, Coinbase, and Binance, Kraken does not offer a liquid staking option. In fact, there’s now a warning at the top of its frequently asked questions page to tell users that they cannot unstake their Ethereum until after the merge. But Kraken’s exposure to staking pools is actually bigger than the 1.1 million ETH would make it seem. In December 2021, Kraken acquired Staked, whose U.S. arm, Staked.US, accounts for 405,600 staked ETH.

Binance, 904,608 ETH

Binance launched its Binance Beacon ETH (bETH) in late 2021 and has been issuing it to Ethereum depositors who have joined its staking pool. The bETH tokens allow for liquid staking, which means that users can use it on the Binance’s Ethereum sidechain, the Binance Smart Chain, in much the same way they would otherwise use Ethereum. It’s currently held in 8,939 unique wallets, according to BscScan.

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