Lido’s market share is shrinking as Coinbase enters the liquid staking market. Competitors offer better APR rates and declining network growth impacts the Lido token.
According to Delphi Digital’s recent data, Lido’s market share has fallen significantly over the past year. This can be attributed to Coinbase’s entry into the liquid staking derivatives market in June 2022. Previously, Lido had a market share of 85%, but this has now dropped to 73%.
Realistic or not, here is the market cap of LDO in terms of BTC
Source: Delphi Digital
No APReciation
In addition, the number of new deposits with ETH stakes on Lido also decreased. At the beginning of last year, 80% of all new betting deposits were placed on Lido.
However, as of now, that number has dropped to less than 40%. One of the reasons for this decline could be the decreasing annual percentage rate of charge (APR) that Lido provides to its users.
In particular, a decrease in interest in staking ETH with Lido could drive users away from the protocol and negatively impact the protocol over time.
Source: Dune analysis
Other competitors, such as Frax Finance, outperformed Lido in this regard. At the time of writing, Frax provided its users with an APR of 7.92%while Lido yielded an APR of just 5.11%.
Major LDO investors are fleeing
According to data from Santiment, the percentage of large holders of LDO has dropped significantly over the past month.
The network growth of the token was also affected during this period. Slowing network growth for the LDO token suggested that the number of times LDO was first transferred between new addresses was decreasing. This implied that new users might not be buying LDO at its current price.
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The activity of staked ETH also declined during this period, which could negatively affect Lido’s ecosystem.
Source: Sentiment
Overall, the data suggests that Lido’s market dominance is threatened by the arrival of Coinbase and other competitors offering better APR rates.
While the price of LDO has risen in the short term, the slowing growth of the network and the decline in new ETH deposits may be cause for concern in the long term.
That said, at the time of writing, the price of LDO, which was at $2.29, is down 5.53% in the past 24 hours according to CoinMarketCap.
This post Is Lido’s dominance of the liquid staking market at risk? Recent data suggests…
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