Lido dominates ETH staking, but why is LDO declining?

• Lido saw around 600 new users daily.
• In less than three months, Lido added around $3 billion to its TVL.

Lido Finance is boldly positioning itself at the forefront of liquid staking, with recent data indicating a surge in user adoption. The platform has witnessed a remarkable influx of users lately, making it a hotspot for Ethereum [ETH] staking. 

How much are 1,10,100 LDOs worth today?

As this user base expands, one can’t help but wonder about the prevailing dominance of ETH staking on the platform and how the LDO token was performing amidst this growth.

Lido sees influx of new users

Token Terminal’s 27 July post has shed light on the remarkable on-chain activity on Lido Finance. Daily, the platform is witnessing around 600 new users joining in.

Although this number might not seem overwhelming initially, projecting the monthly average of new users with the same figure reveals a different perspective. The potential is substantial.

📊@LidoFinance is acquiring ~600 new depositors per day pic.twitter.com/YjGtfKFFi4

— Token Terminal (@tokenterminal) July 27, 2023

Considering Lido’s strong position in Ethereum staking, this steady influx of new users can impact the platform’s dominance within the ETH staking landscape. 

Analyzing Lido’s ETH staking dominance

As per the latest data from Dune Analytics, Lido Finance held an impressive 31.7% of the Ethereum staking market share at press time. The platform has facilitated the staking of over 7 million ETH out of a total of 24 million ETH that’s staked across various platforms.

Additionally, over the past six months, Lido has experienced exceptional growth in staking, boasting a remarkable 65% increase in staked ETH. In comparison, the closest competitor in the staking space only managed a 5% increase during the same period. 

Furthermore, a significant turning point for Lido was observed after the Shanghai upgrade, as the platform witnessed the highest staking netflow, surpassing an impressive 2 million ETH. This starkly contrasts with the nearest competitor, who recorded a netflow of approximately 500,000 ETH. 

LDO price and TVL trend

According to data from DefiLlama, the Total Value Locked (TVL) on Lido Finance displayed a consistent upward trend as its staking dominance expanded. As of this writing, TVL surpassed an impressive $14.8 billion.

A closer examination of the TVL revealed a substantial increase of approximately $3 billion between May and July.

Realistic or not, here’s LDO’s market cap in BTC’s terms

However, a different picture emerged when observing LDO’s performance on a daily timeframe. Unlike the positive movement in TVL, LDO did not experience a similar upward trajectory. It saw a slight decrease during the same period.

LDO was trading at approximately $1.9 at press time, with a minor increase of less than 1% after several days of decline. Additionally, its short Moving Average (yellow line) acted as a resistance level, indicating its weak price trend.

Source: TradingView