- Lido has benefited most from the Ethereum merge.
- Users at Lido do not have to commit to a 32 ETH minimum.
- Between October and November 2022, Lido collected $1 million in fees.
Ethereum merge was one of the biggest positive events in the crypto industry in 2022. Liquid staking protocol Lido Finance seems to have benefited most from the event as its Total Value Locked (TVL) has surpassed that of MakerDAO.
Per the data from DefiLlama, Lido’s liquid staking protocol rose to $5.9 billion in TVL, with MakerDAO just below it at $5.89 billion, followed by AAVE at $3.7 billion.
According to Lido Finance’s website, the January 2, 2023 data shows $5.8 billion ETH, $23.2 million Solana, $43.9 million Polygon, $11 million in Polkadot and $2.2 million in Kusama stake.
The benefit that Lido offers is they allow users to access liquid Ether staking, and they do not need to commit to the traditional boundary of 32 ETH minimum.
Ever since Ethereum shifted from Proof-of-Work (PoW) to Proof-of-Stake (PoS), the demand for staking has increased considerably, according to Blockchain data analytics.
The report highlights the bump caused by the introduction of Merge in staked ETH, making it an out-and-out cryptocurrency native yield-bearing instrument quickly taking the place of other collateralized yield-bearing services.
Lido emerged as one of the biggest beneficiaries of this, as their fee revenue has been directly proportional to Ethereum PoS earnings. As Ludo sends received Ether to the staking protocol.
Since October 2022, they had been collecting $1 million in fees daily, said Lido in November 2022.
During the same time, Maker protocol MakerDAO’s governing body saw its revenue decline to nearly $4 million in the third quarter, which was a 86% drop from the previous quarter. This was according to the Messari statement in September 2022, considering weak loans and fewer liquidation demands to be the reason.
At the same time, Lido held a maximum of 31% stake in ETH among the DeFi as of September 2022, a considerable amount compared with Coinbase holding 15% while Kraken holds 8.5%.
Total Value Locked (TVL)
Total Value Locked is a metric used to measure the health of a Decentralized Finance protocol. While calculating and looking at a DeFi TVL ratio, the main factors are calculating the currency supply, maximum supply, and current price.
A higher TVL on a DeFi protocol is considered a good sign, as it indicates more capital is locked into the platform. In turn, this could provide many benefits to the users, including a better yield.
A lower TVL on a DeFi protocol is considered a bad sign, as it indicates a lesser locked capital & a lower yield for users.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/01/03/lido-overtakes-makerdao-in-the-tvl-race/