What does Lido’s future hold as overall growth declines

• Lido faced a significant decline in various areas, impacting overall growth.
• APR drop and reduced engagement posed further challenges for Lido’s future.

Lido [LDO] saw a massive decline in interest over the past week despite its dominance in the DeFi sector. This caused the protocol to see a fall in growth across various sectors in the network.

Encountering some problems

The total value locked in Lido experienced a significant decline of 0.94% in the past week.

This decline was primarily attributed to the fall in prices of Ethereum [ETH] and Polygon [MATIC], resulting in the press time TVL settling at $23.08 billion.

📈 Lido Analytics: January 15 – 22, 2024

– Lido TVL down 0.94% to $23.08b.
– ETH staking deposits up 12,352 ETH.
– stETH APR stable with 7d MA at 3.60%.
– wstETH bridged to L2 down -3.86% to 147,828 wsteth. pic.twitter.com/CcvJoNn2vq

— Lido (@LidoFinance) January 22, 2024

The stETH annual percentage rate (APR) also witnessed a downturn over the last week, registering at 3.60%. For context, APR represents the annualized interest rate that users can earn by staking their assets.

This decline in APR could potentially have adverse effects on Lido, impacting sentiment around it.

Beyond the Ethereum network, Lido’s presence on Layer 2 (L2) platforms exhibited a reduction in bridged wstETH. The amount of wstETH bridged to L2 experienced a decrease of 3.86%, totaling 147,828 wstETH.

Specifically on Arbitrum [ARB], the bridged wstETH amounted to 98,013, while on Optimism [OP], it stood at 40,283 wstETH.

This decline indicates a waning interest in Lido on these Layer 2 solutions, raising concerns for the protocol’s future.

🖥️ Lido on L2

The amount of wstETH bridged to L2 decreased by 3.86% to 147,828 wstETH:

🟠 Arbitrum: 98,013 wstETH (7d: -3.50%)
🔴 Optimism: 40,283 wstETH (7d: -5.99%)
🟣 Polygon: 6,619 wstETH (7d: 0.00%)
🔵 Base: 2,913 wstETH (7d: +7.26%) pic.twitter.com/yftVGNwLkZ

— Lido (@LidoFinance) January 22, 2024

Meanwhile, Lido’s engagement with Cosmos also faced a notable setback, with the wstETH bridged to Cosmos plummeting by 30.51% in the past week, amounting to 2,043 wstETH.

A deeper analysis of the Lido protocol revealed a decline in revenue by 5.6% in the last 24 hours.

Additionally, a substantial 20.4% decrease was observed in daily active addresses, signaling reduced user engagement.

These negative trends in revenue and active addresses present challenges for the sustained success of Lido.

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

State of the token

The price of Lido also experienced a setback, declining by 7.04% in the last 24 hours. The network growth of the token witnessed a decline, indicating a loss of interest from potential new addresses.

Moreover, the velocity of LDO fell during this period, reflecting reduced trading frequency. These factors collectively contribute to a challenging scenario for Lido in the current market conditions.