BlocksInform
There is seldom a boring moment in the crypto marketplace.
While bitcoin (BTC) and ether (ETH) remain in stasis, governance tokens of liquid staking platforms, which allow users to retain liquidity of their tokens even though they are locked in a blockchain network, are rallying.
Lido DAO or LDO, the governance token of Lido decentralized autonomous organization (DAO), has jumped 19% in the past seven days, with prices reaching a 1 1/2-month high of $1.30 early Tuesday, according to data source Coingecko. The Swise token of the liquid staking protocol jumped by more than 70% in one week, while the rocket's RPL increased by nearly 10%.
The rally follows the declaration of the ethereum developers. 8 announcement that the network's next hard fork, or backward-incompatible upgrade, will take place in March. The upgrade, known as Shanghai, will include code allowing withdrawals of ether staked in the Beacon Chain since December 2020, finally giving participants a timeline for reclaiming their ether.
'More recently, cash staking derivatives [chips] have been on a positive upward trend. This is thanks to the Shanghai upgrade expected in a few months, which will enable withdrawals of staked ETH," pseudonymous analyst CroissantEth tweeted. 'Because withdrawals are turned on, many think that more users will put their eth."
Sequencing refers to locking coins in a cryptocurrency portfolio to support blockchain transactions in exchange for rewards. The process is vaguely similar to investing in fixed income securities like bonds.
However, staking may immobilize assets over an extended period of time. Cash Staking Protocols eliminate opportunity cost by issuing a derived token that represents the claim on locked coins and earned rewards. These derived tokens can be used in other places to generate additional returns.
At the time of the press, the aether marked by liquid staking protocols represented more than 40% of the total aether deposits of more than 15.7 million, according to data from the dune analysis. This accounts for the positive actions of the cash staking governance tokens prior to the Shanghai upgrade.
Ether has the lowest staking ratio of just 14% (Messari) (Messari)
According to Messari, ether has a staking ratio of 14%, the lowest among layer 1 coins. Therefore, there is a lot of room for growth in ether participation – the amount of pegged ether versus the total supply of cryptocurrency – and the adoption of liquid pegging protocols.
The activity in liquid staking protocols has grown in recent weeks, as pointed out david alexander of BINANCE labs.
Fast? about upgrading and stapling Shanghai:
As milestone withdrawals now have an interim exit date, this has resulted in an increase in staking activity - the highest monthly volume since April. However, does this upgrade also impact staking providers in many ways?? pic.twitter.com/A8UuSuikai
— David Alexander II (@Mega_Fund) December 27, 2022
With a total value locked at $5.9 billion, Lido has left behind MakerDAO and AAVE to become the world's biggest decentralized finance (DeFi) protocol, according to data source Defi Llama.
Shorts stacked in LDO
Still, some traders appear skeptical of long-lasting gains in LDO. This is clearly apparent from the deeply negative funding rates or the costs incurred to maintain long or bearish long positions in Old-related perpetual futures.
The graph shows that indebtedness is asymmetrical on the downside. (Coinglass) (Coinglass)
A negative financing ratio indicates a downward trend in leverage. Leaving the doors open to a short tightening – an exaggerated rise in prices triggered by the squaring of bear positions.
"short s have stacked on (in ldo) subsequent the outperformance in hopes that early investors sell (as per on-chain evidence)," crypto hedge fund ouroboros capital said coindesk. "However, it is likely as well that the shorts can be tightened, opening another leg up as these vendors on the chain were just shutting down their perp/long spot shorts."
