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Sell or stake: Ethereum staking giant Lido mulls choices for its M ETH

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While LidoDAO’s current inflows of about 1000 stETH are sufficient to cover operating costs for the time being, it’s worried that may not last.

The decentralized autonomous organization (DAO) behind Lido — the largest Ethereum staking pool — is deliberating whether it should sell or stake the $30 million in Ether (ETH) from its treasury.

A proposal was submitted on Feb. 14 by the DAO’s financial unit, Steakhouse Financial that considers four choices, one of which contemplates staking part or all of its ETH on Lido in the form of Lido Staked ETH (stETH).

Another would see LidoDAO selling a part or all of its 20,304 ETH for a stablecoin, with the purpose being to extend the DAO’s runway.

*The four proposals (pictured) submitted by Steakhouse Financial to the LidoDAO asking how it should manage its treasury. Source: Lido*

The proposal comes as ETH staking withdrawals will soon be enabled through Ethereum’s Shanghai and Capella upgrades expected to take place sometime in earl 2023 according to the Ethereum Foundation.

While converting the ETH to Staked ETH may lead to more protocol rewards, the DAO is wary that too much staking may risk it not having enough Ether on hand “in case of need.”

*Assets currently held in LidoDAO’s treasury. ETH currently accounts for about 9% of the DAO’s over $350 million treasury holdings. Source:* *Lido.*

Regarding operating expenses, Steakhouse Financial suggested it may be necessary to swap Ether for a stablecoin in order to “preemptively secure additional runway.”

Steakhouse Financial noted that with LidoDAO’s current inflows at about 1000 stETH per month, the DAO is making approximately $1.3 million to 1.5 million per month with the price of ETH hovering between $1,100 and 1,700 over the past few months.

*The monthly inflow of stETH on Lido has steadily increased since January 2021. Source:* *Dune Analytics.*

Steakhouse Financial said those figures alone should be “sufficient to cover monthly operating expenses.”

However, they’re still deliberating whether it is worth converting excess stETH into a stablecoin to better prepare for any change in market conditions that may lead to increased operating expenses.

A business development representative from LidoDAO noted that they’re not particularly thrilled with the current state of the stablecoin market:

“Considering all the FUD and rumors, both DAI due to USDC collateral and USDC itself pose potential risk if they become frozen. That being said I have issues with the liquidity of LUSD and USDT has yet its own issues.”

It appears as though most LidoDAO members are in favor of partially selling and staking a portion of the 20,304 ETH locked in its Aragon smart contract.

The proposals come as the total value locked (TVL) of stETH fell 6.66% between Feb. 6-13.

Lido Analytics: Feb 06 - 13, 2023

TLDR:
- Lido TVL is down -6.66%, following a -7.22% fall in the price of ETH.
- Lido led in new stake on Ethereum, with a 27% share in weekly deposits.
- New @AaveAave V3 wstETH: 34,726 (+34.87%).
- Lido on Polygon reaches 2% market share. pic.twitter.com/iWA9YccM6e
— Lido (@LidoFinance) February 13, 2023

The TVL of Lido is currently $8.13 billion, according to the on-chain metrics platform DeFiLlama.

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LDO price faces downside risks from "sell-the-news" sentiment coupled with a bearish technical setup.

Lido DAO (LDO) has declined by more than 40% in the last 30 days with more room to fall in the coming days amid a potential sell-the-news event, i.e. the Merge.

Lido DAO Ether deposits surge 160% in 2022

Lido DAO is Ethereum's biggest staking service, having deposited over 4.14 million of the blockchain's native asset, Ether (ETH), into the Ethereum 2.0 smart contract on behalf of its users, according to the latest data.

*ETH 2.0 total value staked by provider. Source: Glassnode*

In comparison, Lido DAO's total staked amount was around 1.6 million ETH at the beginning of this year. The boom reflects a growing demand for Lido DAO services ahead of Ethereum's scheduled transition from proof-of-work to proof-of-stake via the Merge on Sep. 15.

LDO, a governance token in the Lido DAO ecosystem, has also undergone an unprecedented price rally in recent months, up more than 350% after bottoming out at $0.39 in June.

Still, the token's sharp correction in the past month raises the possibility of an extended downtrend now that the pre-Merge hype is nearing its end. In addition, a technical setup also alerts about a potential price decline ahe.

LDO hints at descending triangle reversal

The latest selling period in the Lido DAO market started after LDO topped at $3.10 on Aug. 13. This downtrend has painted a pattern that appears to be a descending triangle.

Descending triangles that form at the top suggest bullish exhaustion. Theoretically, a descending triangle breakdown below the lower trendline—could crash the price to the level at length equal to the maximum triangle height.

LDO now tests the triangle's lower trendline area (~$1.79-$1.82) as support. The token could drop toward $1.17 if it breaks below the support level while accompanying a rise in trading volumes. In other words, a 35% drop from current price levels.

*LDO/USD daily price chart featuring descending triangle breakdown setup. Source: TradingView*

Conversely, a rebound from the $1.79-182 support area could have LDO test the descending triangle's upper trendline at around $2.10 as resistance.

Also, a decisive breakout above the upper trendline would risk invalidating the bearish setup discussed above.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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LUNA flips Ethereum becoming second largest network for staked value

March 4, 2022 Coin Telegraph

Coin Telegraph

Data shows that there are currently 226,325 stakers accounting for $29.5 billion worth of locked up LUNA which has propelled the network into second place for staked value.

According to data from Staking Rewards, Terra (LUNA) has flipped Ethereum (ETH) in terms of staked value, with $29.5 billion worth of LUNA locked up compared to Ether’s $25.9 billion.

The platform’s data shows that there are currently 226,325 LUNA stakers, making it the second most staked crypto asset with more than four times the number of those staking ETH at 54,768. Solana leads the staking charts with $35 billion in staked value.

In terms of annual staking rewards, LUNA is estimated to yield 6.62% on average while Ethereum fetches 4.81%. The most rewarding out of the top 10 staked assets is Polkadot (DOT) with 13.92%.

Top 5 networks by staked value, Mar. 4 - Stakingrewards.com

Staking Rewards highlighted the flippening on March 1, noting that LUNA staking had overtaken Ethereum, however, some users pointed out that data from DeFi Llama appears to contradict the figures dramatically.

DeFi lama suggests different data pic.twitter.com/lGbZ1lXefy
— Luna Studio.UST (@Luna_Studio_) March 2, 2022

DeFi Llama’s data shows that Ethereum towers over its competitors in terms of a total value locked (TVL) of $111.4 billion, compared to LUNA’s TVL of $23.35 billion. However, these figures incorporate collateral locked across DeFi protocols, not just ETH staked on the Beacon Chain, hence the discrepancy. The Beaconcha.in explorer currently reports 9.7 million ETH staked worth around $26.5 billion at current prices which is similar to Staking Rewards figures.

One trend that both data aggregators have confirmed, however, is that interest in LUNA has surged of late. Over the past seven days, LUNA’s TVL has increased 26.905% and sits well above third-placed Binance Smart Chain (BSC) at $12.03 billion worth of TVL.

Staking Rewards clarified that staked value and TVL metrics are “entirely different,” as the latter can also incorporate assets locked in decentralized finance (DeFi) protocols for features such as lending.

The price of LUNA has gained a whopping 78.4% over the past 30 days to sit at roughly $92.84 at the time of writing, while its market cap currently totals $34.5 billion.

As previously reported by Cointelegraph, the asset's bullish recovery comes off the back of the Terra protocol burning 29 million LUNA tokens worth ($2.57 billion) late last month. The move coincided with the supply of TerraUSD (UST) — a stablecoin backed by LUNA — increased more than 14.5% to 12.92 million tokens.

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