Liquid staking platform Lido Finance has become the DeFi protocol with the highest total value locked (TVL), overtaking MakerDAO.
According to data aggregator DeFiLlama, Lido now sits at the top with $5.97 billion TVL, followed by MakedDAO with $5.92 TVL and AAVE with $3.73 TVL, at the time of writing.
The protocol’s recent success stems from the Ethereum Merge upgrade in Sept., which moved the blockchain from Proof-of-Work (PoW) to Proof-of-Stake (PoW) consensus mechanism.
As part of the PoW framework, users have to stake 32 ETH to become validators. But Lido’s pooled staking allows users to liquid-stake ETH without the minimum requirement.
Since Ethereum’s network upgrade, liquid staking platforms have been in huge demand. Per a Nansen report, nearly 6 million of the total 14.5 million ETH is staked on liquidity platforms, such as Lido and Rocket Pool, accounting for more than 40% of the total staked ETH.
Lido has emerged as the market leader, controlling nearly 80% of the staked ETH (stETH) supply. Together, Lido, Curve, and AAVE handle 52% supply of stETH, which has witnessed a more than 120% rise in trading volumes post the Merge.
According to Lido’s website, as of Jan. 2, the platform holds nearly $6 billion in total stake assets, of which $5.8 billion is in Ethereum, $26 million in Solana, $46 million in Polygon, $10 million in Polkadot, and $2 million in Kusama.
Due to the high amount of staked ETH, Lido’s fee revenue has been directly proportional to ETH PoS yield rewards. According to DefiLlama, Lido has been earning over $1 million in fees every day since Oct. 26th.
In contrast, MakerDAO’s revenue has declined to around $4 million in Q3, a 86% drop from the previous quarter.