Lido Revenue Declined 23% in 2025 as Staking Yields and Market Share Shrink

Ethereum staking protocol Lido reported a 23% drop in total revenue in 2025, with earnings falling to $40.5 million. The decline was attributed to user withdrawals and reduced staking yields. Lido's market share also declined amid increased competition and capital rotation toward alternative staking methods.

The firm noted a structural shift in the Ethereum staking landscape, with capital moving toward exchange staking, institutional staking, and APR-maximizing strategies. This shift reduced the size of the market segment where Lido holds leadership. The Simple LST segment, historically Lido's strongest, has seen declining demand.

Lido is exploring a potential LDO token buyback program to be launched in Q2 of 2026. Under the proposed plan, protocol-generated staking rewards would be used to buy LDO from the open market and deploy them into an LDO/wstETH liquidity position held by the DAO.

Why Did This Happen?

The decline in Lido's revenue was driven by user outflows and reduced staking yields. Lido reported network-wide APR compression, which affected overall earnings. This is part of a broader trend where capital rotates toward exchange staking, institutional staking, and APR-maximizing strategies.

The Simple LST segment, which has been Lido's core, has been contracting. Capital is shifting to other staking methods that offer higher yields or more flexibility. This shift reflects a broader capital reallocation in the Ethereum staking space.

What Are Lido's Strategic Responses?

In response to these challenges, Lido has taken several steps. The firm implemented a 15% headcount reduction in 2024 to improve long-term sustainability. Lido is also exploring a token buyback program using staking rewards to buy LDO from the open market and deploy them into an LDO/wstETH liquidity position.

Lido aims to expand beyond its core staking product and launch offerings for institutional investors and higher-yield seekers. The protocol plans to introduce new products that cater to a broader range of investors.

What Are Analysts Watching Next?

Lido's strategic focus includes expanding beyond its core staking product and launching offerings for institutional investors and higher-yield seekers. The firm's 2025 strategic focus also includes launching new products that cater to a broader range of investors.

Lido has introduced its EarnETH DeFi strategy to stVaults via the DeFi Wrapper connector. This integration allows users to launch a public staking product with DeFi-amplified APR in a single day. This strategy combines staking rewards and additional DeFi yield within one product, enhancing the efficiency and accessibility of yield-generating opportunities for users.

Lido's liquid staking model allows users to stake PoS assets and receive tokenized versions that maintain liquidity. This model enables users to participate in DeFi while earning staking rewards. The LDO token serves as the governance token for the Lido protocol.

The DeFi Wrapper integration enhances the protocol's flexibility and user accessibility. LDO token holders can vote on proposals in the Lido DAO, which governs the protocol and ensures stakeholder alignment in decisions like fee parameters, node operators, and other protocol aspects according to protocol documentation.