LST sector takes a hit, but Lido marches forward

• The liquid staking sector remained resilient despite declining token prices.
• Lido Finance maintained dominance with substantial market share and development initiatives.

In a year marked by market volatility, the liquid staking sector has defied the odds, showing substantial growth despite challenges. The sector has not been without its hurdles, notably declining token prices.

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Over the past few months, token prices across the sector have experienced significant declines, with the average 3-month price movement showing a decrease of -26.21%.

2/ Price Performance

Token prices have experienced significant declines across the sector in the past months. The average 3-month price movement was -26.21% ? pic.twitter.com/a2OrrK7zmq

— Sebastian Motelay (@SebastianMotel1) October 8, 2023

Lido puts up a fight

However, even in this environment, Lido [LDO] Finance retained its dominant position within the sector. Lido boasted a remarkable 84.4% market share based on assets staked.

This robust presence was further underscored by Lido’s Market cap to Assets Staked ratio, which stood at 0.11. This figure is significantly lower than the sector’s average (0.85) or median (0.67) values, reflecting Lido’s commanding position.

Source: token terminal

Lido’s popularity was also evident in its impressive number of token holders. On Ethereum alone, 271,350 addresses held Lido’s stETH token, marking a significant lead over Rocket Pool’s rETH, which has just a fraction of that number.

Even on non-Ethereum liquid staking tokens like MSOL and SAVAX, there was a substantial user base.

Additionally, the Total Value Locked (TVL) in Lido also surged, reaching $15.37 billion, a notable 10.24% increase within a week. However, the staked ETH Annual Percentage Rate (APR) witnessed a slight decline over the past week, with the 7-day moving average settling at 3.56%.

Source: Lido

Governance remains active

Amid this impressive growth, Lido has also been focusing on its development. Proposals for development on Solana have been actively discussed and are gaining traction.

One proposal involves Lido on Solana development contributor (p2p) seeking 1.5 million DAI to fund 12 months of operations. This funding is intended to cover various aspects of Lido’s development, including a development retainer of $200,000 per quarter.

These initiatives are designed to expand Lido’s presence and usability.

However, the proposal also outlines an alternative in case of unsustainable financials or low fee generation. If the “Sunset” option is chosen, p2p will provide a detailed timeline and instructions for users to claim their SOL from protocol contracts.

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The “Sunset” process would involve a gradual cessation of operations, including halting new staking deposits, off-boarding voluntary node operators, and discontinuing frontend support, with unstaking available only through CLI.

At the time of writing, the option for sunsetting had a higher number of votes from the governance.

Source: Snapshot