One of DeFi’s most widely-used yield instruments, Solana LSTs are witnessing month-on-month decline for the first time since 2022.
Diminishing LST use comes as faith in DeFi falters. Amidst a series of devastating exploits that may have cost depositors over $300M in a matter of weeks, DeFi advocates are losing their religion, accelerating the decline of LST use.
Meanwhile, Arbitrum’s seizure of $71M $ETH stolen in the KelpDAO exploit has reignited the decentralization debate, prompting calls for standardized DeFi security ratings across the crypto industry.
Solana LST Rate in Decline for First Time Since 2022
After trending upwards for over three years, Solana’s LST rate is finally showing signs of slowing down.
Based on Blockworks data, Solana’s weekly LST staking rate, measuring the percentage of network stake minted as Liquid Staking Tokens, has dropped from 15.53% in the first week of January to 14.25 in mid-April.
This decline marks the first time that Solana’s LST rate has dropped over three consecutive months since December 2022.
Between a downturn in network REV and diminishing emission-based rewards, waning LST adoption is likely due to a declining yield and a reduction of flexibility-focused holders. Weekly staking revenue has dropped considerably in recent months, causing holders to seek opportunities elsewhere.
Additionally, LST adoption rates now face a new challenge. After a slew of destructive hacks in 2026 that have resulted in the loss of over $600M, users are starting to turn their backs on DeFi as sentiment towards the onchain economy plummets.
While the majority of DeFi users argue that the risks are simply too great, Others hold a more optimistic view. Conceding that DeFi is “gonna take a hit”, DefiLlama co-founder 0xngmi asserts that the sector will bounce back.
Arbitrum’s KelpDAO Freeze Reignites Decentralization Debate
Adding to DeFi’s woes, Arbitrum’s decision to freeze 30,766 $ETH stolen by attackers has sparked controversy across the onchain community.
Purists argue that by freezing the funds, Arbitrum has betrayed one of the core principles of decentralization. Detractors claim that the Arbitrum Security Council can seize assets from any wallet at its discretion, effectively making the network a centralized financial playground subject to the whims of a select group of individuals.
Meanwhile, other commentators have argued that the ends justify the means. While allowing centralized entities the power to manipulate the chain at will is an imperfect scenario, protecting users is paramount.
Experts suggest that Arbitrum’s intervention represents a critical inflection point for the industry. Decentralization may be a fundamental tenet of crypto, but the risks it poses may be unpalatable for a wider user base and institutional scale players.
Are DeFi Ratings the Path Forward?
With DeFi sentiment in dire straits, Solana ecosystem leaders are taking a stance on the best way forward for the network. Kamino co-founder Marius Ciubotario is adamant that Arbitrum’s decision was the correct one, arguing that teams need to design ready triggers that can be pulled to protect funds.
Kamino’s recent launch of Whitelisted Reserves is a good example of protective measures that do not equate to full control of funds by a centralized entity.
Meanwhile, Jupiter COO Kash Dhanda has suggested that DeFi protocols could implement a standardized rating system. Acknowledging that the model might present new problems, Dhanda argues that having a unified measuring stick for gauging DeFi health across the industry would ensure users are adequately informed on the risks of various applications.
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