The popular cryptocurrency analyst Coin Bureau, has turned his lights on Lido Finance, underlining that it could have a significantly large influence over the leading smart token platform, Ethereum, and thus play a leading role in the cryptocurrency ecosystem.
The liquidity protocol, Lido Finance, is a decentralized autonomous organization (DAO) through which you can stake. The believes it can evolve as the de facto governance protocol for Ethereum:
“In plain English, Lido Finance allows you to stake cryptocurrencies that work with a proof-of-stake mechanism without having to lock them, which means you can trade them freely while you have already staked them. The short explanation of how this works is that when you stake your cryptocurrency through Lido Finance, the protocol gives you a tradable token that acts as a sort of proof-of-stake for the cryptocurrency you have staked.”
It holds 50% of the ETH that have been staked
The native asset of the liquidity protocol, the Lido DAO (LDO), is an ERC-20 token released in January 2021 with a maximum supply of one billion and can be used for voting and participation in the protocol’s decentralized autonomous body.
According to the Coin Bureau, the Lido DAO could essentially end up ruling the second largest cryptocurrency asset, Ethereum, due to high demand for staking:
In terms of the governance entity, if Lido Finance continues to grow at the pace it is doing, it is very likely to become the de facto governance layer of Ethereum itself, once it completes its transition to a proof-of-stake mechanism.
This is because if 100% of the ETH that becomes stake in the Beacon Chain is done through Lido Finance, then the Lido DAO would have incredible influence over Ethereum itself.
The Lido Finance team actually believes that this is destined to happen due to the demand for staking in Ethereum. Consider that current estimates see the protocol holding 50% of all staked ETH for the coming months.”
Etherscan shows that Lido Finance accounts for over 32% of all ETH staked on the Beacon Chain, which is considered the backbone of Ethereum’s consensus proof-of-participation mechanism.