Lido Beats MakerDao To Become Largest DeFi Protocol in TVL

Liquid staking protocol Lido Finance now has the highest total value locked (TVL) of all Defi protocols beating even MakerDAO which has been the dominant protocol for quite some time.

Data from DefiLlama shows that Lido’s liquid staking protocol currently stands at $5.9 billion in TVL, slightly more than MakerDAO’s $5.89 billion and AAVE’s $ 3.7 billion.

How Lido Did it

Total value locked (TVL) measures the overall health of a decentralized finance (Defi) protocol.

Lido’s model allows its users access to liquid Ether staking without the traditional 32 ETH minimum requirement. This has greatly increased the number of users willing to stake Eth on Lido compared to other Defi staking platforms.

Blockchain data analytics from Nansen in December noted that such staking solutions had been in high demand since Ethereum’s shift to the proof-of-stake (PoS) mechanism. 

The famous Merge which introduced staked ETH as an out-and-out cryptocurrency-native yield-bearing instrument has surpassed other collateralized yield-bearing services.

Since Lido sends received Ether to the staking protocol, its fee revenue has been increasing with the increase in Ethereum PoS earnings.

Lido said in Nov 2022 that it has been collecting $1 million in fees every day since Oct 2022.

A Nansen report in September 2022 showed that Lido held the largest amount of staked ETH among Defi with 31%. This is a significant amount compared to major crypto exchanges such as Coinbase and Kraken which hold 15% and 8.5% respectively.

According to the Lido Finance Website, there are stakes totalling $5.9 billion in Ethereum, $25.6 million in Solana, $45 million in Polygon, $11 million in Polkadot and $2.2 million in Kusama.

Lido Defeats MakerDAO

On the other hand, MakerDAO’s which previously dominated the Defi market, revenue declined to just over $4 million in Q3, an 86% drop since the last quarter.

MakerDao has had the highest TVL for many years. The overtaking by Lido means that the protocol is doing quite well despite the ongoing crypto winter.

According to a Messari statement in Sep 2022, the reasons cited were weak loan demand and few liquidations.

The Role of The Merge

The rise in Lido can be attributed to the massive adoption of Ethereum staking solutions.

Ethereum’s move from proof-of-work (PoW) to proof-of-stake (PoS) in September 2022 resulted in higher demand for such solutions.

For this reason, Lido Finance emerged as the top Defi protocol boasting the most total value locked (TVL).


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