Lido’s new collaborations fail to make LDO see green – Why?

Posted: September 17, 2023

• Axelar Network collaborated with Lido to bring stETH to the Cosmos ecosystem.
• Lido governance introduces a risk reduction proposal as Lido continues to demonstrate resilience in TVL and performance metrics.

Axelar Network, in a recent development, has announced a collaboration with Lido [LDO] to introduce stETH to the Cosmos [ATOM] ecosystem.

Is your portfolio green? Check out the LDO Profit Calculator

The venture entails bringing both versions of stETH, namely the rebasing token stETH and the auto-compounding wrapped token wstETH, into the Cosmos network. This process involves bridging from Ethereum via Axelar to Neutron, subsequently integrating with the broader IBC ecosystem of chains.

This transition marks the beginning of stETH and wstETH’s journey within Cosmos. Once wstETH is successfully deployed on Cosmos, and cross-chain governance mechanisms are firmly established, Lido DAO will assume control of the bridge’s ownership, administration, and overall management from Axelar and Neutron.

This collaboration could potentially expand stETH’s utility and accessibility.

Governance remains active

Additionally, Lido governance recently introduced a proposal aimed at mitigating risks. The proposal outlines a surplus management framework for Lido DAO, primarily designed to minimize redemption risks in the event of correlated slashing incidents.

The initial recommendation includes increasing the slashing provision by 5x to 25,608 stETH, with plans for dynamic and algorithmic updates.

a surplus management framework for Lido DAO to minimise redemption risk to users in case of correlated slashing events

initial recommendation is to increase the slashing provision by 5x to 25,608 stETH (and for it to dynamically/algorithmically update)https://t.co/4YPjExGsAh pic.twitter.com/9IKHzF0Tgn

— sacha (@sachayve) September 15, 2023

Some slowdown in performance

Despite these factors Lido was unable to see growth over the last week.

Examining Lido’s performance metrics, the Total Value Locked (TVL) saw a marginal decrease, resting at $14.05 billion (7-day change: -0.38%) following a slight dip in token prices.

However, Lido secured the top position in net new deposits to the Ethereum Beacon Chain for the week, with an impressive increase of 42,880 ETH. The stETH Annual Percentage Rate (APR) remained relatively stable, reflecting a 7-day moving average of 3.73%.

Source: Dune Analytics

On the other hand, the total volume of (w)stETH deposited into DeFi pools exhibited a minor decrease of 5.72% over the past week.

Currently, it stands at 2,972,935 stETH, constituting 34.56% of the total stETH supply. Notably, a substantial portion of these deposits originated from stETH withdrawals from the Lybra Finance pool.

Realistic or not, here’s LDO’s market cap in BTC terms

Furthermore, the quantity of stETH bridged to Layer 2 (L2) experienced a modest reduction of -0.43%, aggregating to 134,699 stETH.

Source: Dune Analytics

Along with the poor performance of the protocol, LDO’s price movement also suffered. At the time of reporting, LDO was trading at $1.52, marking a slight decrease of 0.42% according to CoinMarketCap. Additionally, the trading volume for LDO recorded an 18.96% decline within the past 24 hours.