In recent weeks, Lido has become the largest DeFi Protocol by Total Value Locked. The project notes tremendous TVL growth across the four chains it is active on. In addition, more people want to support proof-of-stake networks but retain liquidity, unlocking new potential use cases.
Lido Is The New King
It is interesting to see how the DeFi TVL rankings have evolved in early 2022. Lido is now the pack leader and continues to run away from Curve and other prominent protocols. That is surprising, but also to be expected. While Curve and other protocols are appealing, there is a bonus to using existing assets to staking and retain the liquidity they provide.
Users who rely on liquid staking providers like Lido can tap into multiple revenue sources. First, they earn the staking rewards on the respective network – Ethereum, Terra, Moonriver, or Solana – and receive equal liquidity in return. Second, those new assets continue to gain support among other DeFi protocols for lending, borrowing liquidity provision, and yield farming.
The combination of earning staking rewards and exploring other yield sources is very appealing. WHile Lid is not the only liquid staking provider on the market, it is the best-known one. As such, assets created by the Lido protocol will have broader use in decentralized finance. It is unclear how well that translates to the four supported networks, but further growth appears in the cards.
What is even more interesting is the TVL per individual chain. Lido represents $16.33 billion in Total Value Locked. Both Ethereum and Terra have an equal share at $8.03 billion. Solana is further down the rankings with just under $277 million. Moonriver is the smallest network at just $2.97 million. The Ethereum-Terra race is exciting to watch, as those are the two biggest chains by TVL today.
Massive Ethereum And Terra Surge
Intriguingly, the statistics confirm how Lido has noted tremendous growth in Ethereum TVL n recent weeks. The protocol went from well under $6 billion in ETH straight to over $8 billion. Some big players intend to provide liquidity to support Ethereum staking through Lido these days. It is a more hands-off approach, even though users can directly deposit funds to the smart contract.
The downside of that approach is how a user would lose their liquidity. Staking funds through the smart contract is locked for a long period. Through Lido, users can unlock their liquidity again right away and explore other opportunities. Even though there is a 10% fee for using Lido for liquid staking, that doesn’t dissuade users from exploring this option these days.
For Terra, the growth is slightly less spectacular but still substantial. Lido represented $4.13 billion in LUNA staking a month ago. Today, that amount has nearly doubled, confirming people want to support the Terra network. Moreover, it seems to confirm the staked LUNA tokens – provided as liquidity back to users – gain broader adoption across Terra’s decentralized finance ecosystem.
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