Analyzing Lido Finance’s ebb and flow amid market unrest

• Net deposits on the Beacon Chain increased on the Lido pool. 
• L2 bridging grew by 5% as TVL fell.

Even as a top liquid staking platform, Lido Finance [LDO] felt the impact of the turbulence. This was the case with many other assets in the market. During the period of unrest, the value of LDO decreased by 18.94%. 

How much are 1,10,100 LDOs worth today?

However, there were some positive outlooks on the Lido ecosystem. According to Dune Analytics, deposits on the Ethereum [ETH], Beacon Chain increased to 112,500 ETH. 

More inflows, balanced withdrawals 

For context, the Beacon Chain acts as the ledger of accounts responsible for conducting and coordinating the network of Ethereum stakers. This happens before stakers validate blocks on the blockchain. 

However, this chain does not process transactions or handle smart contract interactions because it does not operate on the execution later, but on the consensus layer. 

This signifies increased interest and user demand in staked Ether [stETH] transactions on the chain, leaving other projects like Rocket Pool [RPL] behind.

Source: Dune Analytics

When it comes to withdrawals, Dune revealed that many participants requested to have their assets removed from the protocol. As of this writing, about 57,937 ETH has been finalized, with about 53,876 ETH claimed.

⚡️ Lido Withdrawals:

– Requested 54,971 ETH
– Finalized 57,937 ETH
– Claimed 53,876 ETH

49.6% of the total amount was claimed by one entity.

(Note the amount finalized might exceed the amount requested as the protocol finalizes withdrawals requested in the previous period.)

— Lido (@LidoFinance) June 12, 2023

On the flip side, Lido lost a sizable part of its Total Value Locked (TVL). The TVL acts as a measure of the protocol’s health by looking at the smart contracts deposits into chains under the project.

Lido: Leaving investors famished

At the time of writing, the TVL seven-day performance was 2.09%. This decline suggests that the DeFi arm of Lido has been starved of liquidity. Thus, investors might only access lower yields for loving assets in the respective smart contracts.

Source: DefiLlama

But at press time, the TVL has had some respite, pushing the value to $12.76 billion. Unlike the TVL, LDO’S value has not yet exited the red zone, registering a 2.17% decrease in the last 24 hours.

As per activity on a number of Liquidity Pools (LPs), some recorded hikes, and others declined. On the Curve Finance [CRV] pool, the ETH/stETH rate slightly decreased by an average of 5%.

Realistic or not, here’s LDO’s market cap in ETH terms

For the Aave V2, LidoStETH deposits increased by 7.45% Furthermore, the rate of bridging from Layer-Two (L2) projects including Polygon [MATIC], Optimism [OP], and Arbitrum [ARB] grew by 5.58%.

Source: Dune Analytics

The median value of this activity implies that the staking market was unfazed by the market capitulation. 

While market unrest can impact short-term performance, the long-term viability of Lido Finance depends on factors such as network adoption, user activity, and the overall growth of the Ethereum staking sector.