Lido Finance Launches Layer 2 Ethereum Staking: Decoding Its Impact on LDO

in a series of tweet made by Lido Finance [LDO] on October 6, the leading Ethereum [ETH] The staking platform confirmed the launch of ETH staking in layer two scaling solutions with token bridge to Arbitrum One and Optimism.

In July, Lido Finance implied in this move as the team noted that the staking platform was “committed to making Lido staking asset tokens widely available on Ethereum Layer 2 as it evolves.”

According to Lido Finance, the first phase of its layer two deployment will allow its users to directly connect wrapped stETH (wstETH) with Arbitrum One and Optimism to preserve “the unique properties of stETH in the process.”

He added that wstETH was selected as a token of choice to enable easy integration between existing decentralized finance protocols.

Additionally, the ETH staking platform intends to allocate 150,000 LDO tokens in rewards per month starting October 7 for wstETH on each network.

This will take the form of liquidity mining incentives at DeFi partners such as Kyber Network, Curve Finance, and Balancer to generate liquidity in wstETH.

Restless lies the head

According to data from blockchain analytics platform Glassnode, with 4.2 million ETH staked through Lido Finance, the staking platform holds 30% of the total ETH staking market share.

It is immediately followed by Coinbase, the centralized cryptocurrency exchange through which 1.93 million ETH coins have been staked.

It is worth noting that the exchange got off to an early start with ETH staking as early as November 2020. Lido launched a month later in December 2020, a few weeks after Ethereum 2.0 Beacon Chain went live, and soon became a force to be reckoned with

Source: Glassnode

With the year so far marked by a series of market-tearing events, most notably the collapse of Terra, Lido’s Total Value Locked (TVL) suffered severely following the decoupling of TerraClassicUSD (USTC).

According to data from DefiLlama, Lido’s TVL was at a high of $18 billion before the collapse of USTC. However, at $6.19 billion at press time, Lido’s TVL is down 66% since May.

Source: DefiLlama

That said, the long-awaited Ethereum merger happened on September 15. Unexpectedly, the hype surrounding the merger did not result in a significant increase in the price of the ETH token.

Shocked by this, data from CoinMarketCap showed that the price of LDO has decreased by 17% since the merger took place.

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