Lido beats MakerDAO, Aave, shows why it’s DeFi’s supreme leader

Amanda Thibeault November 28, 2023
Lido beats MakerDAO, Aave, shows why it’s DeFi’s supreme leader

Out of the top 10 DeFi protocols, Lido Finance [LDO] had the highest capital inflow in terms of assets locked, DefiLlama revealed. Using the Total Value Locked (TVL) metric, the blockchain aggregator showed that Lido had an inflow of $1.58 billion in the last seven days.

Other projects, including MakerDAO [MKR], and Aave [AAVE], were nowhere near Lido’s numbers. The surge in Lido’s TVL meant that the protocol was able to attract much more capital than the others.

Also, the increase means that market participants involved in committing liquidity trusted Lido enough to give better yields than the others. One reason for the hike was the increase in demand for liquid staking. 

Liquid staking allows market players to participate in staking while allowing the flexibility to buy and sell the token. For Lido, its dominance in this space could be connected to Ethereum’s [ETH] decision to switch to Proof-of-Stake (PoS).

Ever since, the demand for Lido stETH has been on the rise. stETH is the cryptocurrency representing an Ethereum token deposited to support blockchain operations.

However, Lido is not the only project offering liquid staking services. Rocket Pool [RPL], which was also in the top 10 DeFi TVLs for the week, does the same.

But Rocket Pool has not been able to gain the same adoption as Lido. At press time, Lido’s overall TVL was $22.88 billion. Rocket Pool, second on the liquid staking protocols table, had a TVL of $2.43 billion.

However, it is noteworthy to mention that there was a widespread increase in liquid staking activity during the week. So, while the projects topped the standings, others had their own share of deposits. 

For Aave and Maker, whose fundamentals are built on lending, it could be difficult to outpace Lido’s run. This is because there have been many predictions that liquid staking now takes the pole position in the future of DeFi, mainly because of the numerous use cases.

Some use cases of liquid staking protocols include yield farming, stablecoins minting, and node running. In Lido’s case, it has also been going far and wide to integrate with other projects.

In recent times, Lido has integrated with the Terra Classic [LUNC] blockchain. Moves like these can help the project in stamping its place as the DeFi king. 

If Lido continues to work toward other partnerships, then the likes of Maker and Aave might have no other options than to concede to the project. At the same time, this does not mean that others cannot pull the strings to overturn the current stance.

Amanda Thibeault