Despite ether withdrawals being enabled with the Ethereum Shapella upgrade in April 2023, an October 16 LSDFi report from CoinGecko stated the sector has grown by 58.7x since January

The Ethereum liquid staking derivatives finance (LSDFi) ecosystem has seen a surge in 2023 as Ether holders preferred staking instead of liquidation.

Despite ether withdrawals being enabled with the Ethereum Shapella upgrade in April 2023, an October 16 LSDFi report from crypto data aggregator CoinGecko stated the sector has grown by 58.7x since January.

By August 2023, LSD protocols accounted for 43.7% of the total 26.4 million ether staked, with Lido having the major share at nearly a third of the total staked market.

The LSDFi sector growth statistics show ether holders would rather re-stake for better yield opportunities than liquidate their assets after withdrawing.

CoinGecko observed that since withdrawals were enabled, the exit queue remained at zero for over half of the time (55%) and stayed below 10 validators for 77% of the time.

LSDs were introduced to enable smaller ETH holders to take part in staking and unlock liquidity after the Ethereum Beacon Chain launch in December 2020.

Since the beginning of 2023, the total value locked (TVL) across the 10 top LSDFi protocols, not including Lido, has soared to more than $900 million, as per the report.

TVL in LSDFi protocols has grown by 5,870% since January this year. Comparatively, the total decentralized finance TVL contracted by nearly 8% over the same period, as per DefiLlama.

The average yield for LSD protocols since January 2022 has been 4.4%, though this will drop as the amount of staked ether rises.

There are presently 27.6 million ether staked valued at nearly $43.4 billion, as per Beaconcha.in.

Over the past two weeks, Ethereum proponents have cheered on the growth of LSDFi platform Diva, which they say is carrying out a “vampire attack” on Lido, tempting users and liquidity from Lido by offering higher incentives.