Lido’s TVL Drops: Is Trouble Brewing For LDO Gains?

• Lido Finance [LDO]’s Total Value Locked (TVL) dropped in the last week due to a decrease in the values of native coins within its operating networks.
• The buying pressure for LDO has declined significantly, leading to a potential price drawback.
• Lido’s dominance of the liquid staking market has decreased since Coinbase’s entry into the market in June 2022.

Lido TVL Drops Despite Launch of ETH/LDO Factory Pool

The Total Value Locked (TVL) on Lido Finance [LDO] fell by 3% in the past week, despite the launch of a new ETH/LDO factory pool which saw over $16 million deposited during that period. This was due to a decrease in native coin prices across its operating networks like Ethereum [ETH], Polygon [MATIC], Solana [SOL], Polkadot [DOT], and Kusama [KSM].

Decrease In Native Coin Prices Impacting LDO Price

CoinMarketCap data shows that ETH’s price dropped 4%, while SOL, DOT, and KSM all experienced drops ranging from 3-6% over seven days. As such, buying pressure for LDO has decreased significantly with a potential price drawback looming on the horizon.

Lido’s Market Share Declining Following Coinbase Entry

According to Delphi Digital, Lido’s market share – which stood at 85% at the start of 2022 – has since come down to 73%. Furthermore, Dune Analytics‘ data reveals that in terms of ETH staking alone, Lido currently only controls 29% – down from 32% on May 22nd this year.

Competition Growing In Liquid Staking Market

The emergence of Coinbase as a major player in the liquid staking space is one contributing factor to this decline. Activity within their platform has driven up competition for users and led them away from other protocols like Lido.

Price Predictions For 2023-24

It remains uncertain whether or not this downward trend will continue into next year; however if it does then investors should brace themselves for further drops in both TVL and price performance for 2023-24.