Ethereum (ETH) and Decentralized Finance (DeFi) are undergoing a seismic shift as the transition to an Eth2 and Proof-of-Stake consensus mechanism helps add value to a network that has historically struggled with scaling problems and high transaction costs.

In addition to this transformation, floating efforts have been introduced to help increase Defi’s utility value and give investors the opportunity to do more with their assets than lock them in indefinitely. Investing in torrents can also help investors build portfolios with better results.

One of the protocols that has benefited from the transition to floating bet is Lido (LDO), a platform that allows investors to earn rewards for betting their tokens, and which also allows them to use the resulting LP tokens to operate various Decentralized Finance (DeFi ) protocols. .

Data from Cointelegraph Markets Pro and TradingView show that the price of LDO rose 28% from the low of $ 1.27 on February 21 to a daily high of $ 1.64 on February 22.

LDO / USDT 4-hour chart. Source: Trading View
Three reasons for the LDO price reversal include the launch of Kusama Support (KSM), an increase in the total value locked into the protocol, and the growing popularity of floating storage in the cryptocurrency market.

Adds LIDO Staking KSM
The latest development of the Lido platform was the addition of support for Kusama Liquid Staking.

This integration is made possible by 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 an ongoing participant bonus of 18% per year, and will also be able to use Kusama (stKSM) on various DeFi platforms to generate extra income.

Other benefits include effortless delays for engagement and disconnection periods, and the ability to maximize effort rewards by dynamically reallocating Lido to the most profitable KSM validation nodes.

TVL takes off
The second calculation to look at is the total value locked to the platform. According to Defi Llama, Lido’s current TVL value is $ 10.97 billion.

Total cost unlocked on Lido. Source: Devi 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 as market sales led to a significant drop in the value of the tokens in the protocol.

Since then, TVL has declined to $ 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 new liquid rates and air droplets to the Cosmos ecosystem

Liquid stacking makes DeFi more realistic
Another factor that helps start LDOs is the growing popularity of liquids.

History of the search for the liquid wedge. Source: Google Trends.
Before adding floating efforts, token holders had to choose between earning rewards through individual efforts on the network and withdrawing them from circulation or using them in DeFi protocols through liquidity association pools.

With liquidity, investors can take advantage of the best of both worlds by placing tokens to secure the network, while earning DeFi revenue by providing assets as collateral.

For example, users who share Solana (SOL) on Lido can also lend stSOL to Apricot Finance for an additional 32% APR. There is also a vote on the AAVE proposal which proposes adding stETH as security in the AAVE v2 market.

If Lido continues to add multi-chain assets for storage and liquid storage, this could open up further increases in the price of the platform’s original LDO token.

In addition, as the cryptocurrency ecosystem continues to move to the point of sale, the popularity of floating efforts is likely to increase, which may also lead to future benefits for LDOs.

Source: CoinTelegraph

LEAVE A REPLY