Lido facing a drought? Lack of liquidity suggests…

July 13, 2023

By Himalay Patel

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

• Lido’s stETH’s liquidity was low compared to ETH.

• Activity on the Lido protocol declined as prices took a hit.

Lido [LDO] has been at the top of its game despite the DeFi sector’s TVL declining significantly over the last few months. The protocol has successfully capitalized on the growing interest in the Liquid Staking Derivative space.

Low on liquidity

However, staked ETH’s [stETH] low liquidity could cause problems for the protocol in the future. According to Kaiko’s data, although СЕХ volumes are on the rise, the off-chain liquidity of stETH is notably inadequate.

Despite being the seventh largest token in terms of market capitalization, stETH’s liquidity failed to compare to ETH. Merely $185,000 worth of bids were found within a 0.5% range of the mid-price across all exchanges.

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