Lido Finance [LDO] prepares for major V2 upgrade; how are ETH stakers affected

• Lido Finance is set to enable stETH:ETH withdrawals once its V2 upgrade goes live.
• LDO’s value has declined since Ethereum’s Shanghai Upgrade.

Following the implementation of Ethereum’s Shanghai Upgrade (Shapella) in April, leading Ethereum [ETH] staking platform Lido Finance [LDO] has scheduled the final on-chain vote for its V2 upgrade on 12 May. 

How much are 1,10,100 LDOs worth today?

According to the staking protocol, if the voting is successful, the V2 upgrade would go live on 15 May, and enable direct in-protocol stETH:ETH withdrawals and staking router architecture.

A Lido V2 update:

The final on-chain vote for the V2 upgrade is scheduled for this Friday, May 12th.

If no last-minute findings are surfaced and the vote is successful, Lido V2 will be live after the vote enactment on May 15th

— Lido (@LidoFinance) May 8, 2023

In an earlier announcement made in February, Lido stated that its V2 upgrade would be composed of two main components; the Staking Router, which is a modular infrastructure that allows the development of on-ramps for new Node Operators, and Withdrawals, which will enable stETH holders to withdraw from Lido at a 1:1 ratio. 

Lido intends for its Staking Router to allow for a more diverse validator ecosystem. Also, by enabling withdrawals, protocol users will have the “freedom to stake and unstake at will.”

Lido since Shanghai

In a new report, on-chain analytics platform Glassnode noted:

“Liquid staking provider Lido still holds the largest market share, with 33.5% dominance, followed by the staking services of the centralized exchanges Coinbase with 11% and Kraken with 7.1%.”

Since the Shanghai Upgrade went live on Ethereum, the total amount of ETH tokens transferred to the ETH 2.0 deposit contract via Lido has rallied by 7.2%. Per data from Glassnode, at press time, Lido housed 6.1 million ETH out of the total amount of ETH coins that have been staked.

Source: Glassnode

Further, Lido has experienced a spike in its ETH staking APR since the implementation of Shapella. Data from Dune Analytics showed a 62% jump in ETH staking APR since 12 April. For context, this stood at 4.37% the day Shapella went live on Ethereum. As of this writing, it was pegged at 7.09%.

Source: Dune Analytics

At $11.96 billion at press time, the protocol’s total value locked (TVL) has also seen a 5% increase since the Shanghai Upgrade. 

On 2 January, Lido’s TVL rallied above that of MakerDAO [MKR] to displace the latter as the decentralized finance (DeFi) protocol with the most TVL. As MakerDAO recovers from the aftermath of the de-pegging of its DAI stablecoin, its TVL was $7.25 billion at press time, with an 8% decline in the last month. 

Source: DefiLlama

Read Lido DAO’s [LDO] Price Prediction 2023-2024

LDO treads in the opposite direction

While Lido Finance logs overall ecosystem growth since the Shanghai Upgrade, the value of its governance token LDO has since declined. Exchanging hands at $1.81 at press time, the token’s value has dropped by 23% in the past 27 days. 

An assessment of the alt’s price movement on a daily chart revealed a significant decline in buying pressure in the last month. Key momentum indicators have trended downwards in the past few weeks, suggesting that LDO has seen less accumulation. 

Source: LDO/USDT on TradingView