The Ethereum liquid staking platform has solely had seven months of optimistic earnings.
Ethereum’s prime liquid staking protocol, Lido, exhibits how platform dimension and adoption don’t straight correlate to profitability.
Regardless of commanding over $25 billion in complete worth locked (TVL), Lido has had a mean month-to-month lack of $7.9 million since its launch in December 2020. The protocol didn’t document its first optimistic month till June 2023, netting $782,000 after bills.
Up to now, 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 practically $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 price of income contains node rewards, slashing and different rewards.
Nonetheless, the outlook is enhancing. Lido’s prices, notably its liquidity bills, have begun to slender, and its income started to extend since Could 2023, in keeping with its v2 improve, which allowed customers to withdraw their ETH from the platform.
Lido’s v2 improve, mixed with EigenLayer’s sluggish rollout that started in July 2023, helped bolster Lido’s TVL and income era, making the protocol economics extra sustainable. For the reason that begin of 2024, the protocol’s earnings is unfavorable $2 million, nevertheless, that marks a major 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 subsequent 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 at the moment sits at $1.16, down 69% from its 2024 excessive of $3.78 set on Jan 10.
