- Lido saw growth as the LSD industry began to expand despite declining interest.
- TVL and activity increased as LDO prices continued to rise.
The DeFi sector has been in limbo since the highly controversial SEC lawsuit was filed earlier in June. However, the LSD (Liquid Staking Derivative) space managed to experience tremendous growth during this period.
Realistic or not, here is the market cap of LDO in terms of BTC
Lido plays a role in LSD’s dominance
According to Messari’s data, the LSD sector has come to significantly dominate the crypto markets.
SEC lawsuits against @BinanceUS And @ Coinbase cause #DeFi TVL drops below $60 billion. But amid the chaos, liquid staking protocols thrive and become the dominant force of DeFi by TVL. pic.twitter.com/RL9Qy8cwLE
— Messari (@MessariCrypto) July 3, 2023
One of the biggest contributors to the expansion of the LSD industry was Lido[LDO]which has performed quite well in recent months.
The Total Value Locked (TVL) in Lido has reached a new peak of $14.75 billion, a growth of 3.84% in the past seven days. This increase was attributed to the combined effect of token price growth and an inflow of new deposits. In addition, Lido took the lead in net new deposits on the Ethereum Beacon Chain, with a total of 132,800 ETH deposited in the past week.
Source: Dune analysis
However, despite this growth, there has been a drop in Lido’s APR (Annual Percentage Return) over the past few days. If the trend of falling APR continues, users may shy away from using Lido to stake out and look for alternatives.
Source: Dune analysis
In the L2 (Layer2) sector, the amount of wstETH (wrapped staked ETH) on various platforms witnessed a 2.50% increase, totaling 111,168 wstETH. There were 64,293 wstETH on Arbitrum, up 2.06% over the past seven days. On the other hand, Optimism listed 42,121 wstETH, up 0.53% over the past week.
However, Polygon had 4,755 wstETH, with a slight drop of 0.42% over the past week.
The LDO token goes along for the ride
The LDO token has paralleled the growth of the protocol as its price increased significantly in recent days. With the price spike, the MVRV ratio of the LDO token also grew. This implied that many addresses with LDO have become profitable in recent days.
Is your wallet green? Check out the Lido Profit Calculator
It could be expected that the highly profitable holders of LDO will sell their holdings in the future. In addition, LDO’s network growth also declined during this period, implying that new addresses began to lose interest in LDO.
These factors may hinder the growth of LDO in the future.
Source: Sentiment