Lido Finance: Negative sentiment overshadows double-digit growth

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  • LDO’s increase in val­ue has not excit­ed mar­ket participants.
  • On-chain vol­ume excelled in prof­it, but GitHub con­tri­bu­tion decreased.

The sen­ti­ment sur­round­ing the native token of Lido Finance [LDO] has been large­ly neg­a­tive, accord­ing to on-chain data from San­ti­ment. As of this writ­ing, the weight­ed sen­ti­ment used to mea­sure the aver­age investor per­cep­tion was ‑0.44.

This hap­pened despite LDO’s per­for­mance in all of May. In the last 30 days, Lido Finance’s gov­er­nance token price increased by 15.34%.

Enthusiasm has not yet peak

While LDO has expe­ri­enced sig­nif­i­cant price appre­ci­a­tion, with a sol­id per­for­mance in terms of price and trad­ing vol­ume, sev­er­al fac­tors con­tributed to the pre­vail­ing neg­a­tive sentiment. 

A crit­i­cal con­cern was the con­cen­tra­tion of LDO tokens in the hands of a few large hold­ers, which raised ques­tions about decen­tral­iza­tion and gov­er­nance. Such con­cerns could under­mine investor con­fi­dence and con­tribute to the project’s neg­a­tive sentiment.

Lido Finace weighted sentiment and LDO social volume

Source: San­ti­ment

How­ev­er, Lido’s social dom­i­nance took a sharp spike since 31 May and has main­tained the increase until press time. The Social Dom­i­nance shows the share of dis­cus­sion around an asset com­pared to oth­er cryp­tocur­ren­cies in the top 100 per mar­ket capitalization.

Hence, the increase in the met­ric sug­gest­ed that LDO was one of the most talked about tokens in the cryp­to com­mu­ni­ty at press time. How­ev­er, growth in the Lido ecosys­tem has been wider than price action and social activ­i­ty alone. 

Rather, Ethereum’s [ETH] liq­uid stak­ing pro­to­col has main­tained its top spot in Total Val­ue Locked (TVL). 

As a decen­tral­ized finance (DeFi) pro­to­col that allows users to stake their earned staked Ether [stETH] rewards, the TVL increase means that investors have increased their appetite for deposit­ing assets into the ecosystem.

Gains for holders but development brushed aside

Besides, the V2 upgrade also impact­ed the increase in con­fi­dence, as well as the hike in stETH.

Despite on-chain vot­ing in favor of the upgrade deploy­ment, Lido Finance’s devel­op­ment activ­i­ty decreased. At press time, the met­ric was down to its low­est state in 2023. 

Typ­i­cal­ly, when the devel­op­ment activ­i­ty increas­es, it infers that GitHub repos­i­to­ries are active. But when it decreas­es like Lido was, at the time of writ­ing, it sug­gest­ed less com­mit­ment to upgrades on the network. 

The ratio of the dai­ly on-chain trans­ac­tion vol­ume in prof­it to loss was at 4.08 dur­ing the time of writ­ing. The met­ric is cal­cu­lat­ed as the dai­ly on-chain vol­ume in prof­it divid­ed by those in loss.

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

Lido Finance [LDO] on-chain volume in profit and loss and Lido development activity

Source: San­ti­ment

A high ratio indi­cates that mar­ket par­tic­i­pants have made more prof­its than loss­es. Irre­spec­tive of the acu­men shown towards LDO, the liq­uid stak­ing con­tin­ues to lead smart con­tracts deposits in the DeFi space. 

How­ev­er, the token might need an increase in par­tic­i­pa­tion ela­tion to con­tin­u­al­ly impact the token positively. 

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