Analyzing the development potential and future goals of Lido Finance

Analyzing the development potential and future goals of Lido Finance – Lido Finance’s provision of liquid staking services has been very successful. It is the biggest ETH staking facility at now, while Ethereum transitions to proof of stake. As part of its development strategy, Lido Finance revealed the next phase. The staking platform intends to target tier 2 networks, beginning with Optimism and Arbitrum.

This was validated by the platform days before the Ethereum 2.0 Merge. This demonstrates its goal to use the full capability of the Ethereum network through L2s.

An update on Lido’s L2 plans pic.twitter.com/nfby4S63Ba

— Lido (@LidoFinance) August 16, 2022

The interest of Lido Finance in Ethereum L2s

The layer 2 networks of Ethereum tackle some of the mainnet’s greatest problems, such as allowing quicker and cheaper transactions.

This enables them to demand substantial volumes. Providing support for L2 will enable wstETH bridging. Therefore, maximizing the network’s potential in a staking scenario.

Wrapped stETH (wstETH) are ERC-20 tokens that become available when ETH is staked.

This enables customers who have staked ETH to continue trading and enjoy some degree of liquidity.

Without L2s support, moving wstETH around on the mainnet is quite costly.

The impending support from Lido will considerably simplify the transfer of wstETH across Ethereum’s DeFi environment.

repercussions of the development for LDO

LDO is primarily a governance token. In the past, however, its price movement has been influenced by good events regarding Lido Finance.

As was the case in the past, the formal announcements of L2s support may stimulate speculative trading.

Demand for LDO might be fueled by institutional traders seeking exposure to wstETH as well as Lido’s staking capability.

This is due to the fact that institutional investors often want to participate in choices that safeguard their interests.

In the last several months, LDO’s price moved in unison with the rest of the crypto market.

This is reflected in its market capitalization, which saw significant withdrawals.

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Moreover, LDO’s market capitalization at the end of June was around 12% of its market capitalization two months previously.

It has had a strong rebound to the current day, paralleling the recovery of the whole cryptocurrency market.

Analyzing the development potential and future goals of Lido Finance
Analyzing the development potential and future goals of Lido Finance

 

Approximately 95% of the LDO supply is now controlled by the top 1% of addresses. Approximately 51% of the entire supply of LDO is now secured through smart contracts.

LDO’s organic demand is mostly limited to governance, while the majority of its price movement is driven by speculation.

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