• Lido has become the largest decentralized finance (DeFi) app by total value locked (TVL), surpassing MakerDAO.
• Users have locked $7.8 billion on Lido, with the vast majority of that sum coming from Ethereum.
• Interest in liquid staking protocols has swelled in 2023 as governance tokens for these protocols have surged in price.
Lido, a forerunner in the liquid staking derivatives market, has become the largest decentralized finance (DeFi) app by total value locked (TVL), surpassing MakerDAO. This milestone has been achieved over the last month, as Lido’s TVL has spiked 33%, according to data from DeFiLlama.
Users have been attracted to Lido to reap rewards for the protocol’s community-led validator staking service. To date, $7.8 billion has been deposited into the protocol, with the vast majority of that sum coming from Ethereum. Smaller amounts have also come from other blockchains, such as Solana.
The surge in interest in liquid staking protocols is driven by the increasing value of their governance tokens. For example, since the end of December 2020, the price of LDO has jumped 108% to $2.01, while its average 24-hour volume rose 802%, according to CoinGecko. Holders of LDO are able to influence how the protocol is managed, from setting fees to assigning node operators.
The current attention surrounding liquid staking protocols is indicative of the growing importance of liquidity in DeFi applications. The ability to move funds quickly and safely is paramount to the success of DeFi applications, and Lido is at the forefront of this trend.
Lido’s success indicates that users are eager to partake in liquid staking protocols, and it is likely that this success will be mirrored in other DeFi applications. With the rise of the liquid staking derivatives market, it is an exciting time for DeFi, and Lido is leading the charge.