- Within six months, Lido’s TVL has doubled MakerDao’s.
- DAI supply has been on a downward trend since the temporary depeg in March.
According to data from DefillamaLido [LDO] currently holds a 32% share of the total value locked (TVL) of all decentralized finance (DeFi). Lido’s TVL has almost doubled compared to that of the previous DeFi king MakerDAO [MKR]. This happened within just six months of Lido taking over the top spot from Maker.
Read Lido Finances [LDO] Price forecast 2023-2024
According to data from the DeFi data provider, the TVL of the liquid staking protocol was $14.57 billion at the time of writing. Lido’s TVL is up 148% this year alone.
Source: DefiLlama
A turbulent year for Maker
Maker was replaced by Lido as the leading DeFi protocol at the beginning of the year, as increased Ether (ETH) staking activity in anticipation of Ethereum’s Shanghai Upgrade drove traffic to the liquid staking protocol.
Between January and when Shanghai went live on April 12, the total value of ETH staked on Lido increased by 22%. Per Dune analysisLido’s share of the ETH staking ecosystem also grew to levels last seen in May 2022.
Source: Dune analysis
While many expected a drop in Lido market share after Shanghai, the opposite is the case. Since the hardfork upgrade on May 12, the total value of ETH wagered on Lido has increased by 33%, data from Glasnode showed.
Source: Glassnode
Furthermore, the growth of Ether staking on the protocol increased despite the continued decline of ETH staking APR offered by Lido. At press time it was 3.87%, down 38% since April 12.
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After the depeg it went downhill
Maker, on the other hand, continued to record a hit on his TVL since the beginning of the year. The situation then worsened DAI past a depeg in March due to the unexpected collapse of Silicon Valley Bank, which temporarily caused the USDC to lose parity with the dollar.
While DAI has regained its linkage, supply has since fallen. At 4.65 billion at the time of writing, DAI supply fell 12% in the second quarter, according to data from Maker Burn.
Source: Maker Burn
When the supply of DAI drops, there are fewer DAI tokens in circulation, which can result in a drop in demand.
A drop in DAI demand means less demand for borrowing the stablecoin, which in turn impacts Maker’s TVL. This means there is a decrease in the amount of collateral locked into Maker smart contracts, causing the TVL to experience a growth lag.