The governance token of the liquid staking platform Lido Finance (LDO) rose more than 20% over the past week. At one point, the coin traded above $2.
The largest share of trading volume for the tokens is on Binance — over 28% or $13.9 million in the last 24 hours in the USDT pair.
However, the price of LDO is roughly 74% below the August 2021 all-time high of $7.3.
Lido Finance enables users to earn on staking of tokens such as Ethereum, Polygon and Polkadot.
The most popular asset in the service is Ethereum. In exchange for ETH locked in the Beacon Chain, users receive stETH tokens, which can be used in other DeFi protocols. Lido Finance is popular among retail investors who do not have the required amount (32 ETH) and the technical know-how to operate as a validator.
In June, the largest ETH/stETH liquidity pool in the Curve protocol shrunk by about sevenfold compared with early May, to $620 million. This occurred amid liquidations of positions in the asset by major crypto investors such as Alameda and Three Arrows Capital.
The price of tokenized ETH at that time diverged from the quotes of the underlying asset — the discount reached 6%. At the time of writing, stETH trades about 3% cheaper than the ‘original’ Ethereum (CoinGecko).
Lido accounts for 30.6% of the ETH locked in the Beacon Chain, the second-largest cryptocurrency by market capitalization.
In August, Coinbase launched a liquid staking service similar to Lido. The trading platform already ranks second in the number of locked ETH in the PoS-version of Ethereum.
The merge of the mainnet with the Beacon Chain is expected to occur on September 15. The largest Ethereum upgrade, The Merge, will move the blockchain to a PoS consensus.
The Lido community did not back a proposal to limit the protocol’s share in Ethereum staking.
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