3 reasons why Lido DAO Token could be on the verge of breaking its downtrend

Ethereum (ETH) and decentralized concern (DeFi) are undergoing a seismic displacement arsenic the modulation to Eth2 and a proof-of-stake statement mechanics is helping to summation the worth proposition for the web which has historically has been plagued with scaling issues and precocious transaction costs. 

Alongside this modulation has been the instauration of liquid staking, which is helping to adhd inferior to DeFi and giving investors the enactment to bash much with their assets than conscionable fastener them up indefinitely.  Liquid staking could besides assistance investors physique much superior businesslike portfolios.

One protocol that has benefited from the displacement toward liquid staking is Lido (LDO), a level that allows investors to gain staking rewards connected their tokens portion besides enabling them to enactment the resulting LP tokens to enactment successful a assortment decentralized concern (DeFi) protocols.

Data from Cointelegraph Markets Pro and TradingView shows that the terms of LDO has rallied 28% from a debased of $1.27 connected Feb. 21 to a regular precocious of $1.64 connected Feb. 22.

LDO/USDT 4-hour chart. Source: TradingView

Three reasons for the terms reversal for LDO see the motorboat of enactment for Kusama (KSM) staking, an summation successful the full worth locked connected the protocol and the rising popularity of liquid staking successful the cryptocurrency market.

LIDO adds KSM staking

The astir caller improvement to travel from the Lido level was the summation of enactment for Kusama liquid staking.

— Lido (@LidoFinance) February 18, 2022

This integration was made imaginable done a developmental concern with the Moonriver Network, a protocol that focuses connected compatibility betwixt Kusama and the Ethereum (ETH) network.

KSM holders who take to involvement connected Lido volition beryllium capable to continuously gain staking rewards astatine an APR of 18% portion besides being capable to usage the staked Kusama (stKSM) connected assorted DeFi platforms to gain further yields.

Other benefits see staking without the hold of bonding and un-bonding periods and the quality to maximize staking rewards done Lido’s dynamic reallocation to the astir profitable KSM validator nodes.

TVL soars

A 2nd metric to enactment is the full worth locked connected the platform. Lido's existent TVL stands astatine $10.97 cardinal according to data from Defi Llama.

Total worth locked connected Lido. Source: Defi Llama.

After reaching a highest of $13.26 cardinal connected Dec. 26, 2021, the full worth locked connected Lido fell to a debased of $7.74 cardinal connected Jan. 31 arsenic the market-wide sell-off importantly reduced the worth of tokens held connected the protocol.

Since that time, the TVL has recovered to $10.97 billion, contempt the information that the full marketplace headdress of the cryptocurrency marketplace has remained flat. The summation of caller assets similar KSM could beryllium a crushed for the rising TVL.

Lido besides supports Ether, Terra (LUNA) and Solana (SOL).

Related: pSTAKE Finance brings liquid staking and a caller airdrop to the Cosmos ecosystem

Liquid staking makes interacting with DeFi much pragmatic

Another origin helping bring a boost of momentum to LDO is the rising popularity of liquid staking.

History of searches for liquid staking. Source: Google Trends

Prior to the summation of liquid staking, token holders had to take betwixt earning rewards done azygous staking connected the web and removing them from circulation, oregon by putting them to enactment successful DeFi protocols done paired liquidity pools.

With liquid staking, investors tin payment from the champion of some worlds by staking tokens to assistance unafraid the web on with the quality to gain a output by successful DeFi by pledging staked assets arsenic collateral.

For example, users who involvement Solana (SOL) connected Lido tin besides lend their stSOL connected Apricot Finance for an further APR of 32%. There is besides a connection ballot connected AAVE that suggests adding stETH arsenic collateral connected the AAVE v2 marketplace. 

If Lido continues to adhd multi-chain assets for staking and liquid staking, it could unfastened the doorway for further terms appreciation from the platform's autochthonal LDO token.

Furthermore, arsenic the cryptocurrency ecosystem continues to clasp the modulation to POS, liquid staking is apt to emergence successful popularity, which mightiness besides effect successful aboriginal gains for LDO.

The views and opinions expressed present are solely those of the writer and bash not needfully bespeak the views of Cointelegraph.com. Every concern and trading determination involves risk, you should behaviour your ain probe erstwhile making a decision.