The popularity of liquid staking has increased over the past year due to the launch and inability of ETH stakers withdraw their tokens before the full launch.
Lido (LDO), a liquid staking platform, has become a major player in this sector. Lido (LDO) is the main staking protocol for many popular tokens. It allows token holders to get an additional yield by putting their staked assets into decentralized finance (DeFi).
LDO/USDT 4-hour chart. TradingView
Cointelegraph Markets Pro and TradingView data show that LDO prices trended higher in March, and then entered a consolidation phase in April. The market is currently in a downtrend. However, growth of the staking industry and the forthcoming Ethereum “merge”, could still be positive for LDO.
Expanding liquid staking options
LDO prices reversed their trend towards February. This was due in part to the addition Polygon (MATIC), liquid staking to Lido protocol. It was created in collaboration with Shard Labs.
Lido for Polygon is here https://t.co/FCv36KDQj4 Stake your MATIC with Lido for an effortless staking experience. Get started on https://t.co/usVwJcgv4Q. pic.twitter.com/ueBk2iSYeE
— Lido (@LidoFinance) March 2, 2022
As of the writing of this article, Lido has more than $14.5million worth of MATIC and is currently earning an 8.7% yield. Stakers can currently stake ERC-20 MATIC tokens. In return, they receive stMATIC. This can be used in DeFi protocols on Ethereum and Polygon.
The total value of the protocol was increased by the addition of assets and an increase in Ether staked on Lido. It reached a record high of $20.83 billion on April 5. According to data from Defi Llama, it currently stands at $18.3 trillion.
Lido Finance total value Source: Defi Llama
Lido’s market share is increasing due to new partnerships and integrations
LDO is also seeing positive investment from institutions as well as integrations with other protocols. Recent investments of $70 million were made by Andreessen Horowitz’s firm, a16z.
We are happy to welcome a16z into the Lido family. pic.twitter.com/XSDc3ANfjS
— Lido (@LidoFinance) March 3, 2022
A16z announced that it will be placing a portion its Ether holdings on the platform in addition to the $70 million investment. This is to reduce operational complexity for institutional investors.
Multiple integrations were made to Lido in March and April. This included the addition of staked Ether (stETH), to AAVE’s lending pools. Multiple platforms within the Solana ecosystem also included Staked Solana, (stSOL), Raydium, Friktion Finance, and multiple protocols that added support for staked Terra, (stLUNA).
Related: The many layers and types of crypto staking within the DeFi ecosystem
Investors could be attracted to decentralization.
LDO developers’ efforts to improve the protocol’s decentralization could also help increase the future outlook.
This process begins with the adoption of Distributed Validator Technology, which allows validators to be grouped into separate committees that attest and propose blocks. This helps to reduce the chance of a validator misbehaving or underperforming.
This allows for simplified and faster addition of new node operator (NOs), as new operators can be paired up with majority trusted NOs, helping to reduce potential risks.
The second improvement is the ability to stake based upon a Node Operator Score. This score is calculated from multiple metrics and provides an incentive for operators to perform at their best.
The creation of new mechanisms such as longer time-locks or giving veto rights a quorum stETH holders is one final improvement. This will help to reduce the risk of governance capture and prevent any unplanned changes to Lido.
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