Lido Finance (LDO): Assessing Probability of Rising Above Staking Domain

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The leading liquid staking on Ethereum, Lido Finance, continues to entice market players. The previous seven days saw the native token, LDO, gaining over 18% (Coinmarketcap data).

At this publication, LDO gained over 11% to change hands near $2.15. However, does the protocol has more for investors?

What It Brings to the Table

Lido Finance has enabled market participants to use their staked assets on the Ethereum blockchain. Moreover, this’s not limited to ETH, as it stretches to Polkadot (DOT), Polygon (MATIC), and Solana (SOL).

Meantime, the platform under review represented the top LSD (liquid staking derivative) provider of any decorum on Ethereum. Numerically, Lido Finance remains the renowned staking provider as we await the Merge, with 4,149,796 staked ETH so far.

That represented over 31% of the overall stake ETH in the marketplace during this publication. But that isn’t it.

Lido has presented a proposal to stretch the stETH (staked ETH) presence to ETH’s two leading Layer2 chains – Arbitrum and Optimism. Consequently, that would expand Lido DAO’s stETH footprint, as Messari elaborated.

Meanwhile, Lido Finance also integrated stETH’s wrapped version, wstETH, to alleviate the complexity of staked Ethereum token contract. Remember the former targeted smart contract integrations.

Lido Finance preferred support wstETH only for some reasons. Nevertheless, it only revealed that wrapped staked ETH ensured simplified bridge contacts plus a smooth integration with the general DeFi market and bridges. Therefore, the alleviating part.

That led to the additional support to back the mentioned integration: Arbitrum and Optimism. Lido Finance announced its next expansion step on August 18.

Meanwhile, the staking protocol targeted the layer2 platforms highlighted here. That confirmed the intention to capitalize on Ethereum’s full capability via Layer2s.

Ups & Downs

After 6-month-long persistent downsides in the TVL (total value locked) in the DeFi sector, July launched new narratives as most protocols welcomed recoveries in their TVL. While publishing this post, LDO’s total value hovered at $7.03 billion (DeFiLlama data).

But perhaps the highest risk to Lido (at the moment) is confidence within the derivatives. Among the reasons stETH made headlines recently is it lost its Ethereum peg.

While publishing this post, stETH traded at $1,566, translating to a 1.2% discount to Ethereum ($1.65K). That might show some pressure on stETH’s peg, which received catalysts from bad events like Terra and Celsius debacle.


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