Lido Finance issues update on its journey towards full decentralization

• Lido issues update about its decen­tral­iza­tion plans and the state of progress.
• LDO fails to drum up a large enough ral­ly to push out of the cur­rent range.

The lat­est update was on Lido’s migra­tion to decen­tral­iza­tion and self-cus­tody. There have been con­cerns in the past about Lido being cen­tral­ized. The update details the stak­ing platform’s efforts to alle­vi­ate those con­cerns and here’s what you need to know.

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Accord­ing to the update, Lido has to go through three steps to trans­form into a ful­ly trust­less pro­to­col. The with­draw­al key rota­tion is the first step nec­es­sary for the tran­si­tion to a trust­less future.

The update sets out the aspects of every step and why they are impor­tant for the protocol’s direc­tion. How­ev­er, the token’s price seems to have not reg­is­tered much gains from this new development.

An update on with­draw­al key rotation:

TL;DR
– dc4bc audit (pub­lished)
– With­draw­al key-rota­tion cer­e­mo­ny (start­ed)
– First key-rota­tion mes­sage (signed)

Impor­tant­ly, this is the 1st of 3 key steps need­ed to turn Lido into a ful­ly trust­less pro­to­col.https://t.co/1Jm7dn5xLA pic.twitter.com/nFYRGuKuFL

— Lido (@LidoFinance) March 17, 2023

One of the most notable aspects of the update is that it clar­i­fied the method­ol­o­gy involved in unlock­ing ETH staked before July 2021. Lido expects the mea­sures to facil­i­tate a smooth unlock­ing and with­draw­al process.

The update also reveals that eight issues were fixed and there were no crit­i­cal chal­lenges. Lido not­ed that the mes­sages being gen­er­at­ed will be broad­cast­ed after the Shapel­la hard fork.

A look at how LDO is fairing after recent events 

LDO’s sup­ply in smart con­tracts dropped from 45.74% at the start of the sec­ond week of March, to 45.09% on 16 March. Its trans­fer rate expe­ri­enced a mar­gin­al increase dur­ing the same period.

Source: Glassnode

The cryp­tocur­ren­cy mar­ket just con­clud­ed a bull­ish week. How­ev­er, LDO’s per­for­mance may not nec­es­sar­i­ly reflect that week­ly outcome.

This is because its $2.56 press time price rep­re­sent­ed a 16% dis­count from its week­ly high. Nev­er­the­less, it man­aged a 12% upside from its mid-week lows.

Source: Trad­ingView

LDO’s inabil­i­ty to bounce back strong and to a new month-to-date high con­firms a lack of strong momen­tum and low investors’ interest.

The cur­rent ral­ly did see more atten­tion shift­ing to Bit­coin and Ethereum. Nev­er­the­less, LDO’s price has shown rel­a­tive weak­ness which is evi­dent by its inabil­i­ty to stay above the 50-day mov­ing average.

How many are 1,10,100 LDOs worth today?

An analy­sis of LDO exchange flows reveals mul­ti­ple key obser­va­tions. The first is that both exchange inflows and out­flows have declined since 15 March. This may explain the lack of strong bull­ish momen­tum, thus LDO’s fail­ure to push to a new high in the last two weeks.

Source: Glassnode

The sec­ond major obser­va­tion is that exchange out­flows, at press time, were still high­er than inflows, hence the bull­ish dom­i­nance. Nev­er­the­less, the low vol­umes sug­gest low whale activ­i­ty. LDO is not expect­ed to deliv­er much more upside if exchange flows con­tin­ue tanking.

In addi­tion, the uncer­tain­ty regard­ing whether stak­ers will sell staked funds when unlocked might dis­cour­age strong accumulation.