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Holders of Lido Finance’s native token, LDO have seen their holdings increase by more than 20% over the past week.
Since last Monday, the LDO has risen from about $1.61 to $1.93, marking a total increase of 20.5%. Trading volume for the token has also skyrocketed in the past 24 hours, up about 19%.
The most popular trading pairs are Binance’s stablecoin BUSD, Tether’s USDT, and Bitcoin. The majority of trading activity is taking place on Binance, FTX, Gate.io, and KuCoin.
However, in the last 24 hours, the price has fallen by about 0.25%. And since an all-time high of $18.62 in November 2021, the LDO has dropped a whopping 89.43%.
Lido Finance is a popular liquidity Staking service. Users can deposit tokens such as Ethereum, Polygon, Polkadot, and other PoS tokens using the protocol to earn attractive returns from the funds they hold.
In exchange for a deposit, users earn a staking version of their holdings. For example, if you earn “Ethereum staking” or stETH, this deposit token can then be used elsewhere to earn extra profits in the decentralized finance (DeFi) space.
LDO, like many DeFi tokens, is a governance token. It allows owners to vote and make suggestions for any changes to the protocol. LDO holders have huge influence in determining whether the platform should host the Terra protocol that branched out after the original was destroyed on May 5.
Lido rises ahead of Ethereum upgrade event
While Ethereum is not technically a PoS-based blockchain network, it will launch soon. And before the upgrade, staking Ethereum using Lido caused an increase in deposits.
Along with the LDO price this week, data collected from Dune Analytics shows that there has been a similar increase in the amount of Ethereum deposited on the Beacon chain since last week.
Beacon Chain is the PoS version of Ethereum that is running in tandem with the Proof-of-work (PoW) version as of December 2020. The Merge event, scheduled to take place anytime from September 10 to September 15, will see the PoW version merged with Beacon Chain.
Lido currently holds more than 30% of the entire Ethereum staking market, storing 4.15 million Ethereum (more than $6.49 billion at today’s prices).
The reason for the success of the project can be attributed to the widespread adoption of stETH throughout the DeFi market. For example, users can use the token as collateral to mint Maker’s DAI stablecoin or earn extra profits by depositing stETH on the Aave lending platform.
The same can’t be said for Coinbase’s new cbETH service, which launched on August 24. However, this exchange accounts for about 14.5% of the staking market.
Whether a centralized service like this will ever surpass lido’s offering is something that remains to be seen.
