Ethereum (ETH) and decentralized finance (DeFi) are experiencing a seismic shift as the transition to Eth2 and the Proof-of-Stake consensus mechanism helps to add value to a network that has historically struggled with scaling problems and high transactions. expenditure.
In addition to this transformation, a fluid effort has been made to help realize the benefits of DeFi and give investors the opportunity to do more with their assets instead of locking them in indefinitely. Pricing can also help investors build more efficient capital portfolios.
One protocol that has benefited from the transition to floating rate is Lido (LDO), a platform that allows investors to earn rewards for accumulating their tokens by letting them distribute the resulting LP tokens to run on various decentralized financial protocols (DeFi). . .
Data from Cointelegraph Markets Pro and TradingView show that the LDO price rose 28% from a low of $ 1.27 on February 21 to a high of $ 1.64 on February 22.
LDO / USDT 4 hour chart. Source: Subject review
Three reasons for the LDO price reversal include the launch of Kusama Support (KSM), an increase in the total value locked in the protocol, and the growing popularity of floating interest rates in the cryptocurrency market.
Adds LIDO Staking KSM
The latest development presented on the Lido platform is an addition to Kusama’s support for liquid handling.
This integration was made possible through a development partnership with Moonriver Network, a protocol focused on interoperability between Kusama and the Ethereum network (ETH).
KSM holders who choose to participate in Lido will be able to receive a permanent bet bonus of 18% per year, and can also use Kusama (stKSM) bets on various DeFi platforms to generate extra income.
Other benefits include the ease of deferring liabilities and splitting periods, as well as the ability to maximize rewards for your efforts by dynamically reallocating Lido to the most profitable KSM verification nodes.
Another calculation to look at is the total value locked (TVL) on the platform. According to Defi Llama, Lido TVL has a present value of 10.97 billion dollars.
The total cost is unlocked on Lido. Source: Dewi Lama.
After reaching a peak of $ 13.26 billion on December 26, 2021, the total value locked on the Lido fell to $ 7.74 billion on January 31, when market sales significantly reduced the value of tokens in the protocol.
Since then, TVL has reached $ 10.97 billion, despite the fact that the total market value of the cryptocurrency market remains unchanged. The addition of new assets such as KSM may be the reason for the increase in TVL.
Lido also supports Ether, Terra (LUNA) and Solana (SOL).
Related: pSTAKE Finance brings floating interest rates and a breath of fresh air to Cosmos’ ecosystem
Stake changes make DeFi more realistic
Another factor that contributes to the acceleration of LDO is the growing popularity of floating efforts.
History of search for floating rate. Source: Google Trends.
Before adding floating bets, token holders had to choose between rewarding individual bets on the network and removing them from circulation or using them in DeFi protocols through interconnected liquidity pools.
While making money, investors can take advantage of both worlds by depositing tokens to secure the network, as well as the ability to earn DeFi revenue by providing assets as collateral.
For example, users who share Solana (SOL) on Lido can also borrow from Apricot Finance at an additional annual interest rate of 32%. There is also a proposal to vote for Aave (AAVE), which proposes adding stETH as security in the AAVE v2 market.
If Lido continues to add multi-chain assets to store and balance cash, this could open the door for further price increases for the platform’s original LDO token.
In addition, as the crypto ecosystem continues to embrace the point of sale, floating transactions are likely to grow in popularity, which may also lead to future benefits for LDOs.