Lido (LDO) sustains 16% weekly gain, what fuels it?

Lido (LDO), a prominent player in the decentralized finance (DeFi) space, has emerged as a frontrunner in the rapidly expanding Liquidity Staking Derivatives (LSD) sector.

Amidst the turbulence caused by the highly controversial lawsuit filed by the US Securities and Exchange Commission (SEC) in June, the decentralized finance (DeFi) sector has found itself in a state of uncertainty and caution.

This legal battle has prompted many projects to reevaluate their strategies and has made investors more cautious in their approach. However, even in this challenging climate, the LSD space has managed to experience substantial growth and defy the odds.

LSD Sector’s Dominance And Lido’s Remarkable Performance

As per data from Messari, the LSD sector has demonstrated significant dominance in the cryptocurrency markets. One of the leading contributors to the sector’s expansion has been Lido, which has showcased impressive performance over recent months.

SEC lawsuits against @BinanceUS and @Coinbase cause #DeFi TVL to plummet below $60B. But amidst the chaos, liquid staking protocols are thriving becoming DeFi’s dominating force by TVL.

— Messari (@MessariCrypto) July 3, 2023

CoinGecko reports that currently, the price of Lido’s native token, LDO, stands at $2.16. While there has been a slight decline of 1.7% in the past 24 hours, the token has experienced a solid 15.7% increase in value during the last seven days.

Source: Coingecko

The surge in LDO’s price has also resulted in a noticeable increase in the MVRV ratio of the token. This signifies that a considerable number of addresses holding LDO have become profitable in the past few days, indicating a positive sentiment among investors and further fueling the success of Lido in the competitive DeFi landscape.

Growth Amidst Concerns: Lido Declining APR

Despite the notable growth and success witnessed by Lido, there has been a recent decline in the Annual Percentage Return (APR) offered by the platform. According to a recent LDO price report, this decline in APR over the past few days raises concerns about the attractiveness of using Lido for staking, potentially leading users to seek alternative options.

Source: Dune Analytics

The declining APR indicates that the rewards and returns generated from staking LDO tokens on the Lido platform have decreased. This development could discourage some users who prioritize maximizing their staking yields from continuing to use Lido.

LDO market cap currently at $1.9 billion. Chart:

As staking rewards play a crucial role in incentivizing users to participate in networks and secure their protocols, a sustained decline in APR might prompt individuals to explore alternative platforms that offer more competitive and potentially higher returns.

To maintain its position as a leading player in the LSD sector, Lido would need to address the declining APR and explore avenues to enhance the rewards offered to stakers, ensuring they remain competitive and appealing to their user base.

Featured image from The Market Periodical