As noted in recent days, Lido DAO (LDO) has seen tremendous growth in investor interest. As a result, the LDO token capitalization has seen a 35% weekly increase, as of this writing.
One of the factors that made the altcoin grow like this was the strong presence of the Lido DAO in decentralized finance (DeFi). Although it went through a correction in its total value locked (TVL), this week the DeFi platform managed to outperform market leader MakerDAO by a few hours.
Currently, even though the father of stablecoin Dai is still in the lead, its advantage over the staking platform is slim. For example, MakerDAO has a TVL of $6.2 billion, while the total value locked for Lido DAO is $6.1 billion.
However, Lido’s impressive performance and Maker’s weak performance are not only seen now. With the advent of the Fusion, Lido has experienced an increase in its fee income commensurate with the gains from Ethereum PoS. On the other hand, Maker has experienced weak revenue performance as the demand for decentralized lending has declined in the crypto market in 2022.
But what is Lido DAO?
Lido was developed to facilitate the participation of the main altcoins in the market, such as Ethereum (ETH), Solana (SOL) and Polygon (MATIC). In addition to having an intuitive platform, it allows investors to stake their assets by investing a small amount of money.
A fitting example of this is ETH staking. In order for a crypto investor to be able to earn income from the altcoin, they must have at least 32 ETH locked up. In fact, an amount that is not very affordable for most cryptocurrency investors. Lido solves this problem by offering a platform with no minimum deposits or infrastructure maintenance.
Another highlight of Lido is that Ethereum betting it is liquid. Therefore, it offers the ETH token, which corresponds to the amount of ETH that you have staked, so that this value can be used in DeFi modes and your income goes beyond staking.
Its token, LDO, grants voting power to its holders. The number of DAO participants is growing, with collaborators working together to build the future of Lido. To make this ever-growing step, the network uses the LDO token, as it is responsible for granting governance rights in the DAO.
Something may threaten the growth of Lido
However, it is important for the crypto investor to know that LDO will not go up forever. First of all, it is valid to note that other Ethereum staking platforms are emerging and this may take a lot of the market away from Lido DAO.
That movement is already starting to happen with the platform’s share of the share dwindling in early 2023 to a fraction of 29%, something it hasn’t experienced since April 2022, according to data from Dune Analytics.
One of the factors that may have motivated this move is the market view of the centralization of the staking of the main smart contract platform. To make this modality more decentralized, investors are looking for alternatives.
In addition to other participation platforms, Lido DAO you can lose this market to cryptocurrency exchanges. After all, it is very practical to leave your ETH locked on a platform where you already buy the altcoin.