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Recent data from the on-chain tracking firm, DeFiLlama, shows that the liquid staking protocol, Lido Finance, has seen an increase in its total value locked (TVL) compared to other DeFi platforms.

The protocol benefits the most from the recently completed Ethereum Merge in September, as it sits on top of the list of other DeFi protocols in terms of TVL.

Taking The Lead

According to DeFiLlama, Lido Finance’s staking protocol now has $5.9 billion in TVL compared to its direct rivals, MakerDAO, and AAVE, with $5.89 billion and $3.7 billion, respectively. Furthermore, as shown by the staking protocol’s website, Lido Finance, as of January 2, 2023, has $5.8 billion staked in Ether.

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In addition, it has about $23.2 million staked in Solana, with $43.9 million in Polygon, Polkadot $11 million, and $2.2 million staked in Kusama. Meanwhile, Lido users can also access staked liquid Ether without meeting the minimum of 32 ETH.

In December, the blockchain data analytic firm Nansen revealed that staking solutions like Lido Finance are increasingly in demand after Ethereum’s successful transition to the proof-of-stake (PoS) consensus algorithm from the proof-of-work (PoW) algorithm.

Nansen’s report also highlights the influence of the Merge in the development of staked ETH as a one-of-a-kind crypto yield-bearing investment tool. Staked ETH has now outperformed other collateralized yield-based products.

As a result, Lido has benefited from the Ethereum Merge with its revenue fee directly related to Ethereum’s PoS earnings since Lido started receiving ETH in its staking protocol. Lido Finance announced in November 2022 that it has been generating about $1 million daily in fees since October.

MakerDAO Protocol Saw Revenue Decline

In contrast to Lido Finance, MakerDAO saw its revenue slump to more than $4 million in its third quarter of 2022. According to a statement from Messari in September 2022, the protocol witnessed an 86% plunge due to liquidation and low loan demand.

By comparison, in the same month, Lido had the highest amount of staked ETH among other DeFi protocols, with a 31% lead, as revealed by Nansen in September. The increase represents a significant milestone compared to some of the largest crypto exchanges, like Coinbase and Kraken, which held 15% and 8.5%, respectively.

The increase in crypto staking in recent months has been remarkable, as it is the digital asset equivalent of earning interest while holding onto a token.

Despite being a volatile investment option, crypto staking guarantees a reward when done correctly. But there have been cases where holders lose part of their funds for one reason or another.

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George Ward

By George Ward

George Ward is a crypto journalist and market analyst at Herald Sheets, known for his engaging articles on the latest digital currency trends. With a background in finance and journalism, he presents complex topics accessibly. George holds a degree in Business and Finance from the University of Cambridge.