Lido (LDO) TVL grew 44% in the last year

The decentralized staking protocol faces a drop from 32% to 27.8% in its market share, while its TVL grows 43.5% in one year.

Lido (LDO), one of the most popular decentralized staking protocols on Ethereum, faces a crucial moment: while its Total Value Locked (TVL) reaches USD 31,667 million, a growth of 43.5% in one year, its ETH staking share fell from 32% to 27.8% in the last year. This decline, combined with a slight reduction in the APR for users, raises questions about its future in an increasingly competitive market. However, its expansion to networks such as Base and Arbitrum could be the key to its reinvention.

LDO price is in a consolidation phase, trading in a sideways range between USD 1.60 and USD 2.20 since December 2024 / Tradingview

The Battle for Ethereum Staking Dominance

Lido, known for allowing users to participate in Ethereum staking without directly locking their funds on the Beacon Chain, has been a mainstay in the DeFi ecosystem. It currently has 9,510,744 ETH staked, representing 27.8% of the total ETH staked on the Beacon Chain. However, this figure marks a significant drop from 32% a year ago.

This decline in market share suggests that Lido is losing ground to emerging competitors and Ethereum-native solutions. Despite this, the protocol managed to increase its TVL by 43.5%, from $22,058 million to $31,667 million over the past year. This growth indicates that even as its ETH staking share declines, users continue to deposit funds into the protocol, possibly to take advantage of other DeFi services or strategies.

Declining Yields and Rising Competition

The APR (Annual Percentage Rate) for Lido users has seen a slight reduction, dropping from 3.07% to 2.90%. This decrease is related to the general increase in ETH staking, which leads to increased competition for rewards. As more players enter the market, yields tend to decrease, which could be driving users to explore alternatives.

Furthermore, Lido faces increasing competition from other staking protocols and Ethereum-native solutions. This dynamic has led to a fragmentation of the market, with users looking for better yields and additional services.

Innovation and Expansion: Lido’s Bet on Layer 2

In an attempt to stay relevant, Lido announced the expansion of its services to Layer 2 networks, starting with Base and Arbitrum. This strategy seeks to offer users new opportunities to use Liquid Restaking Tokens (LRTs) as collateral and access third-party rewards, all while benefiting from reduced gas costs on these networks.

According to Lido's official announcement, users can now access "liquid eModes" on Base and Arbitrum, allowing for maximizing rewards through strategies such as staking, resttaking, and point farming. This expansion not only diversifies options for users, but also positions Lido as a key player in the multichain DeFi ecosystem.

Technical Analysis: LDO in Consolidation

The price of LDO is in a consolidation phase, trading in a sideways range between USD 1.60 and USD 2.20 since December 2024. At the time of this report, LDO is trading at USD 1.84, showing a long-term bullish sentiment by staying above the EMA200 located at USD 1.67. However, the price is testing the dynamic support at the EMA50 at $1.81, suggesting that investors are closely watching the next moves.

Can Lido Maintain Its Leadership?

Lido faces a challenging landscape: as its TVL reaches all-time highs, its ETH staking share declines and returns for users shrink. However, its expansion into Layer 2 networks and robust development activity (with 1,000 monthly commits and 65 active developers) suggest that the protocol is taking steps to adapt to an ever-evolving market.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrencies are volatile assets; please conduct your own research before investing.