Lido in muddy waters? New data around LDO suggests….

• Interest in LSD declines, Lido protocol sees some turbulence
• LDO prices surge, however, metrics projected a pessimistic outlook

The larger staked ETH market has started to reflect regulatory concerns, according to new data. Over the past few weeks, the overall amount of ETH staked through liquid staking derivatives has declined too.

Read LDO’s Price Prediction 2023-2024

Overall ETH staked through liquid staking services has declined from 304,684 to 65,664, according to Dune Analytics’ data.

Source: Dune Analytics

Here, the declining interest in Liquid staking could impact Lido’s positive performance, which it has seen over the past week.

The plot thickens…

According to DeFiLlama, Lido’s TVL managed to grow from 8.069 billion to 10.09 billion on the charts. However, the hike in TVL wasn’t only contributed to by staked deposits. In fact, the appreciating price of ETH also had a role to play in the TVL’s spike.

Source: Defi Llama

Even though Lido’s TVL continued to rise, Lido’s dominance in the liquid staking derivates sector fell. At press time, 31.4% of all ETH was staked through Lido. Other competitors such as Coinbase and Kraken enjoyed a high share too and captured 17.7% and 7% of the market, respectively.

Due to the volatility caused by the USDC saga, the overall reserves of the Lido protocol also fell. Lido’s reserves on lending protocols such as Curve and MakerDAO fell by an average of 21% The reserves included both ETH and stETH.

Over this time period, Lido Finance recorded a decline in its total earnings. Specifically, in the last 24 hours, the protocol’s earnings dropped by 11%. A factor contributing to the decline in revenue could be the fall in daily active users on the network, with the same depreciating by 10% over the past week.

Source: token terminal

Although there has been a decline in activity on the protocol, the price of the LDO token has risen by 18.55%. Nevertheless, the rise in prices occurred even though there was a fall in network growth and velocity.

This suggests that the price of LDO hiked, despite the token experiencing low activity and a lack of interest from new users.

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

Source: Santiment

This decline in activity could be seen as an opportunity for bears to bet against LDO and take short positions against the token. It remains to be seen how the future plays out for LDO.