Robert Steinadler, 21 days ago
Lido is the biggest provider of liquid staking, with only a few competitors who are starting to conquer some of its market shares. Liquid staking has many advantages. One of them is being able to invest or spend Ether that is being staked. Recently, Lido set a record that is notable and also tells about the long-term sentiment of market participants.
What conclusions can we derive from the fact that 150,000 ETH were staked on a single day?
On February 25th Lido published a record. Over 150,000 Ether were staked within a very short period. In response, a safety feature was activated that is called Staking Rate Limit. The purpose of the rate limit is to prevent side effects such as a dilution of rewards that are being paid to the stakers. It ensures that side effects are prevented without stopping deposits immediately.
The weekly inflow even reached a peak of 400,000 ETH, which is worth $600 million at the time of writing. Stakers experienced a delay during the rate limit when trying to deposit Ether into Lidos smart contract and mint stETH in return.
The stETH token represents the Ethereum that is staked with Lido in a 1:1 ratio. Since the value of stETH can fluctuate, its price is in the proximity of ETH, but can also fall below or rise above.
First of all, there is demand for Ethereum staking by large entities. They move their funds into staking protocols like Lido to get rewarded. Even though the market is still going through a difficult time, this means that they rather invest in Ether than liquidate it for Dollars or Euros.
This isn’t necessarily overly bullish news, but it tells us about investor sentiment. There is a group that is still convinced that Ethereum will stay the leading smart contract platform. Should the so-called burn rate rise about the emission rate of Ether, these entities are earning ETH while it’s getting scarce. Of course, this is only the case if the demand is going to rise in the future.
The second learning is that Lido becomes a trust anchor within the Ethereum ecosystem. More users and more Dollars are bound to its staking protocol. It might become one of the most important infrastructure providers and is a project that one might want to keep an eye on.
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