Lido Token Increases by 24% as stETH Slowly Repegs

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Lido Token Increases by 24% as stETH Slowly Repegs

Lido Token Increases by 24% as stETH Slowly Repegs
Lido Finance is a popular staking platform for cryptocurrencies. Source: Shutterstock
Source: Decrypt
1657103876 06 Jul / 10:37

In the previous 24 hours, Lido's native token LDO has soared by more than 24 percent, reaching a weekly high of $0.66.

stETH, Lido's Staked Ethereum currency, looks to have increased in value with Ethereum. Both increased by slightly over 5 percent overnight, with the staked version trading at $1,091 and Ethereum trading at $1,127.

The current difference between Ethereum and stETH is a divergence of around 3 percent for Lido's staked token.

According to research by blockchain analytics company Nansen, this is important, although at the peak of its de-peg last month, stETH fell 6 percent short of the target.

Lido’s rising LDO token is used for protocol governance, allowing holders to regulate fees and token distribution, approve and remove Lido node operators, and vote on Lido DAO governance proposals.

Anyone may become a validator for Ethereum 2.0, so long as they have 32 Ether to lock up to activate the program and earn incentives for storing data, executing transactions, and contributing blocks to Ethereum.

However, Lido provides an alternative for people without sufficient finances.

Lido is a staking pool that enables users to stake any amount of ETH through smart contracts, which are automated, self-executing financial contracts. Users earn yields in stETH, which cannot now be redeemed 1:1 for Ethereum but will follow the integration. Additionally, it may be lent, staked, and exchanged for other tokens.

Staked Lido issues Ethereum to represent Ethereum that has been locked up in Ethereum’s Beacon Chain — a network that will be merged with Ethereum’s mainnet in August as part of an upgrade that will transition the entire network to a proof-of-stake consensus mechanism and, according to reports, make the network 99.95 percent more energy-efficient.

Last month, Lido was at the heart of controversy as cryptocurrency lender Celsius stopped withdrawals to prevent a bank run that may have further depressed the price of stETH.
Nansen reported that Celsius now has at least $449 million worth of stETH in a public wallet after it was revealed that Celsius had staked client cash on Lido and maintains at least $449 million value of stETH in a public wallet.

Lido is now the fourth-largest DeFi protocol on Ethereum, with a total value locked (TVL) of $4.79 billion. The platform also accounts for the lion’s share (31.6 percent) of Beacon Chain depositors.

Despite fears about centralization, 99.8 percent of Lido’s DAO opted to retain Ethereum staking capacity unlimited.

Many, including Ethereum’s inventor Vitalik Buterin, Beacon Chain community manager Superphiz, and Ethereum Foundation researcher Danny Ryan, have tweeted openly that staking dominance will result in centralization.

In response, Lido asserts that their staking is not antithetical to the Ethereum concept, noting that it was created “to prevent centralized exchanges from getting the lion’s share of staked Ethereum” and “to preserve Ethereum decentralized.”

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