Liquid staking outpaces bear market as Lido's rise fuels $20 billion TVL
Date: 2023-09-05 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
Ignoring the bearish market sentiment, the total value of assets locked up (TVL) in liquid staking projects is rising.
According to DeFillama, you can see a very impressive growth in the TVL category in the past year, which amounted to more than 20 billion dollars. It is worth noting that this growth significantly outpaces other decentralized finance sectors, including lending and centralized exchanges over the same time period.
Using crypto protocols such as Lido (LDO), Frax Ether(FXS) and Rocket Pool, users get a unique opportunity to receive rewards for staking. But at the same time, they retain liquidity for other activities using this protocol. The growth of the sector is driven by the Ethereum (ETH) upgrade in Shanghai, allowing stakers to easily withdraw their own ETH.
This update raised the enthusiasm in the crypto community towards these protocols. In parallel, Nansen's Ethereum Shanghai Dashboard shows a trend of ETH staking deposits outpacing withdrawals since the beginning of the process. Such deposits are concentrated on platforms with liquid rates, but Lido dominates.
Payment of the Deposit and withdrawal of Ethereum funds. (Reason: Nansen)
Also, recent regulatory action in the United States and aimed at Kraken's staking service providers has provided liquid staking protocols with a clear advantage over their central counterparts.
Lido still dominates.
Lido is positioned as an example of the dynamic growth of liquid staking. In April 2022, the protocol’s TVL reached its peak value of $20.32 billion, according to DeFillama’s calculations. However, it was thwarted by the UST Terra dispatch after falling to $4.51 billion.
The sharp drop in ETH prices during this period was the reason for the decline. At the same time, TVL Lido's circulation decreased from 6.59 million to 4.27 million.
And later, Lido experienced a resurgence in its on-air TVL, skyrocketing to an all-time high of 8.63 million times.
However, this beautiful rise in ETH TVL has yet to translate into an equivalent rise in its USD TVL, primarily due to the prevailing price of ETH. ETH is currently trading at $1,623, less than 30 days from the previous level.
However, other liquid staking protocols including Rocket Pool and Frax Ether have also seen significant expansions in their TVL over this period.
