The Ethereum liquid staking platform has solely had seven months of constructive earnings.
Ethereum’s prime liquid staking protocol, Lido, exhibits how platform dimension and adoption don’t immediately correlate to profitability.
Regardless of commanding over $25 billion in complete worth locked (TVL), Lido has had a median month-to-month lack of $7.9 million since its launch in December 2020. The protocol didn’t document its first constructive month till June 2023, netting $782,000 after bills.
Thus far, Lido’s most worthwhile month was March 2024, when the protocol made $2.6 million, and its least worthwhile month was September 2021, with a $50 million loss, 94% of which went to liquidity bills. It has solely had seven worthwhile months and misplaced $447,000 in July.
Lido can be one of many largest price turbines in DeFi, with almost $1 billion in annualized charges. Nonetheless, working bills, liquidity bills, and value of income have been main hurdles to beat throughout its first three years. In response to the Dune dashboard, Lido’s value of income consists of node rewards, slashing and different rewards.
Nonetheless, the outlook is enhancing. Lido’s prices, significantly its liquidity bills, have begun to slim, and its income started to extend since Could 2023, consistent with its v2 improve, which allowed customers to withdraw their ETH from the platform.
Lido’s v2 improve, mixed with EigenLayer’s gradual rollout that started in July 2023, helped bolster Lido’s TVL and income era, making the protocol economics extra sustainable. Because the begin of 2024, the protocol’s earnings is unfavorable $2 million, nonetheless, that marks a big enchancment in comparison with 2023, which incurred a $40 million loss.
Lido didn’t reply to The Defiant’s request for remark.
The Lido DAO token, LDO, has been principally uncorrelated to the protocol’s profitability and TVL. After the v2 improve in Could 2023, the LDO token worth fell as a lot as 30% over the following 5 months, whereas the protocol’s TVL grew by 15%, and its profitability stayed comparatively flat, with a $300,000 loss over the time interval.
LDO presently sits at $1.16, down 69% from its 2024 excessive of $3.78 set on Jan 10.
