Investing.com – Cryptocurrency, the native token of Lido Finance, is by far the best performing cryptocurrency in the top 100 year-to-date. Having started the year 2023 around $0.95, Lido DAO marked a high of $2.26 on Sunday evening, an increase of almost 138%.
The cryptocurrency has since corrected, showing at $1.8880 as of 7:50 a.m. CET, but still holds a gain of more than 80% over a week. Over the past 24 hours alone, Lido DAO has posted a gain of +27%, a performance that outperforms most other digital assets.
Recall that last week, Lido DAO briefly overtook Maker as the largest DeFi protocol, amid growing interest in liquid staking protocols.
Lido Finance is said to be responsible for nearly 30% of all ETH tokens staked according to available blockchain data, making it the largest liquid staking platform for Ethereum today.
What is Liquid Staking?
Recall that staking is the method of securing Proof of Stake cryptocurrencies, such as Ethereum since last year’s Merge update. Staking involves “blocking” cryptocurrencies and using their weight to verify the authenticity of transactions.
The owner of the crypto receives a return that can be compared to the interest on a bond. However, unlike a bond, while the tokens are locked in, they cannot be traded, traded, or used as collateral. In other words, they are illiquid.
And this is where liquid staking comes in. A liquid staking provider accepts crypto deposits, stakes them, and gives the depositor a receipt that can be exchanged for the staked cryptos. The receipt is a representation of those staked tokens that can be traded or used as collateral elsewhere, allowing you to enjoy staking while still having your cryptos.
ETH staking benefits Lido DAO
Unsurprisingly, demand for liquid staking platforms, of which Lido DAO is the leader, increased dramatically after Ethereum, the second largest cryptocurrency by market capitalization, transitioned from a proof-of-work mechanism to one. of proof of stake in 2022.
It should also be recalled that the next network update, Shanghai, will allow users to withdraw their staked ETH tokens, which should encourage more people to participate in ETH staking, and a number of investors will choose to do so. do through Lido Finance.
Finally, note that at the current price of $1.8880, Lido DAO is posting a correction of more than 16% from yesterday’s peak, which should encourage investors to be cautious.