Lido Finance became the largest DeFi protocol in terms of total value locked (TVL), a statistic that records the amount of assets placed in various DeFi initiatives, on Thursday. At the time of writing, it was holding $19.4 billion in cryptocurrency.
Curve, a decentralized exchange specializing on stablecoins, previously dominated this indicator for nearly six months. Curve presently has approximately $19.28 billion in assets and trails Lido by only $120 million, indicating that the two companies are neck and neck for the time being.
Anchor Protocol, MakerDAO, and Convex Finance are among the top DeFi projects in the rankings, with TVLs ranging from $11 billion to $17 billion.
Understanding Lido’s Ascension
Today’s lead demonstrates Lido’s growing popularity as a key channel for liquid staking on blockchains such as Ethereum, Terra, and Solana. Liquid staking is a mechanism in which users delegate tokens to a staking service while keeping the underlying value in the form of derivative tokens.
A system like this is popular since it frees up users’ liquidity, which can then be used in other DeFi protocols to generate more yield. Lido users on Ethereum, for example, can exchange their ETH for Staked ETH (stETH), a derivative token reflecting staked assets with the identical value.
“What really stands out to me is how popular stETH has become as collateral and for yield farming strategies,” said Andrew Thurman, content lead at blockchain analytics platform Nansen. “Investors are flocking to staked ether and its derivatives for its income potential and its composability.”
Lido Finance uses more than one blockchain. The team also provides a liquid staking solution for LUNA, the Terra blockchain’s native asset. stLUNA is a token that represents staked Luna in Lido and contributes over $7 billion to the protocol’s worth.