Lido Finance’s liquid staking platform saw massive growth in November, with over $20 billion locked in, driven by the launch of version 2.
Staked ETH increased by 5.17%, and unique stakers surpassed 200,000, but concerns arose about Lido’s 77.27% market share in liquid staking.

Lido Finance (LDO), a prominent player in the liquid staking ecosystem, has made headlines with its outstanding performance in November 2023. The DeFi project’s total value locked (TVL) increased by 18.61% since October, breaking the $20 billion barrier. 

The successful release of Lido’s version 2, which enabled users to convert their staked Ethereum (stETH) back to Ethereum (ETH) and boost staking trust, is responsible for this spike in TVL. Furthermore, the double-digit price increases of Ethereum in November greatly boosted the deposited monies’ USD worth.

Staking Records Broken

The noteworthy increase in staked ETH in November was one of Lido Finance’s noteworthy accomplishments. With 5.17% more ETH staked than the previous month, the total ETH staked reached an amazing 9.27 million. The increase in unique ETH stakers, which surpassed 200,000 and increased by 2.96% from the previous month, was likewise associated with this growth.

Furthermore, Lido Finance dominates the liquid staking market. DeFiLlama statistics show that Lido is the clear market leader in this category, with an incredible 77.27% market share. Although this accomplishment is praiseworthy, concerns about centralization and possible security threats have also been raised within the Ethereum community.

Strategic Expansions and Partnerships

Moreover, Lido has increased its visibility in the DeFi environment employing partnerships and strategic alliances. Notably, it has secured listings on the Hashkey Exchange and forged ties with Aave V3 on Base. These calculated actions improve Lido’s market position and make it more widely available to a wider range of users in the decentralized financial industry.

Lido’s continued importance in the DeFi industry has raised concerns about the protocol’s broad control over liquid staking. To put things in perspective, Lido is responsible for almost half of the $50.5 billion total value locked (TVL) in the DeFi business. Despite these reservations, the platform is still the market’s top option for liquid tokens.

Centralization Concerns and Security Risks

Centralization within the liquid staking environment is a topic of contention, given Lido Finance’s dominant market position. When describing Lido as the “biggest attack on Ethereum’s decentralization” in an article from a few months ago, Ethereum developer Evan van Ness did not hold back. Evan emphasized in his essay how crucial it is to keep the market share cap at 33% to keep the protocol from potentially manipulating the Ethereum network.

Lido may be the biggest attack on Ethereum’s decentralization (“credible neutrality”) in our entire history

It’s about to breach 33%

Yet many are staying silent

Why? pic.twitter.com/O7Y37FZrE0

— Evan Van Ness (@evan_van_ness) September 1, 2023

These concerns underline the delicate balance between innovation and security within the DeFi space. Even though Lido Finance has unquestionably made great progress in liquid staking, serious concerns exist regarding the general well-being and decentralization of the Ethereum ecosystem, given its dominating position.

Turning to the market performance of Lido Finance’s governance token, LDO, it was trading at $2.21 at the time of writing. Despite the impressive developments in the liquid staking sector, the LDO token has recently experienced relatively modest gains, with an increase of just 1.6%.

 

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Filed under: Bitcoin - @ December 13, 2023 9:16 pm