In the last week, Lido Finance’s native token, LDO, holders have seen their holdings grow by more than 20%.
According to CoinMarketCap, LDO has risen from roughly $1.61 to $1.93 today, representing a total gain of 20.5% since last Monday. Trading volumes for the token have also increased roughly 19% in the last 24 hours.
Binance’s stablecoin BUSD, Tether’s USDT, and Bitcoin have been popular trading pairs. Most trading occurs on Binance, FTX, Gate.io, and KuCoin.
However, the price has dropped by about 0.25% in the last 24 hours. LDO has dropped 89.43% since its all-time high of $18.62 in November 2021.
Lido Finance is a well-known “liquid” betting service.
To earn an attractive yield on their holdings, users can deposit tokens such as Ethereum, Polygon, Polkadot, and other proof-of-stake (PoS) tokens using the protocol.
Users receive a staked version of their holdings in exchange for their deposit; for example, depositing Ethereum earns you “staked Ethereum,” or stETH. This deposit token can then be used elsewhere in the decentralized finance (DeFi) space to earn a higher yield.
The LDO token is a governance token, like many DeFi tokens. It allows holders to vote on and propose protocol changes. After the original Terra protocol burned to the ground in May, LDO holders wielded enormous power in deciding whether the platform should host the forked Terra protocol.
Preparations to The Merge.
Ethereum is not yet a PoS-based blockchain network, but it will be very soon. In addition, deposits in Ethereum staking using Lido have increased ahead of the project’s most ambitious upgrade.
Along with the price of LDO this week, data from Dune Analytics shows a similar increase in the amount of Ethereum deposited on the Beacon Chain since last week.
Since December 2020, the Beacon Chain has been running in parallel with the proof-of-work (PoW) version of Ethereum. The PoW version will merge with the Beacon Chain during the merge event, scheduled anytime between September 10 and September 15. Lido now controls more than 30% of the Ethereum staking market, hosting 4.15 million Ethereum (worth more than $6.49 billion at current prices).
The project’s success is most likely due to the widespread adoption of stETH in the DeFi market. Users can use the token as collateral to mint. Maker’s stablecoin DAI or they can earn a higher yield by depositing stETH on the lending platform Aave.
The same cannot be said for Coinbase’s new cbETH offering, which debuted on August 24. Nonetheless, the San Francisco-based crypto exchange has captured approximately 14.5% of the staking market. It remains to be seen whether a centralized service like this will overtake Lido’s offering.
