Congratulations to $LIDO, which has officially flippened Curve to edge their way into the top spot on DeFi Llama.
Curve may have been ripping lately in terms of price, but overall TVL across most of DeFi has stagnated for the past six months. The notable exception has been the boom in ETH staking. With the ETH Merge™️ forthcoming, Lido’s liquid staking is proving a winning solution for users preparing for the main event.
Notably, controlling Ethereum is just one part of Lido’s growing empire. Nearly half of their TVL is from their operations on Terra. Imajin if some of that staked Luna found its way into a Curve pool…
If you’re a believer in the unproven concept of “fundamentals” when valuing DeFi protocols, Lido is worth a look.
Flywheel maxis needn’t feel too distraught about Curve falling to second place, though. The common ties between the two protocols run deep. Is it any coincidence that the top two protocols by TVL are also both heavy users of Vyper?
Lido’s path to the top has run throughout Curve for its entire journey, which we’ve detailed as far back as last year. The existence of the stETH pool, Curve’s largest pool by TVL at $4.8B, has been crucial to reinforcing the token’s peg while keeping it liquid.
Lido has continually reinforced its dominance through its deft bribe game.
As the Merge™️ approaches, some users are raising the red flag about Lido’s dominance and its effects on Ethereum decentralizatoin. With environmental FUD soon becoming moot, TardFi is flailing about looking for a new FUD angle, and the “centralization” angle looks to be getting some pick-up.
This angle of attack first picked up steam in December 2021, when a former fashion model decried ETH as being VC-controlled. More recently, concerns of Lido dominance are getting attached to this narrative.
None of this dismisses the thoughtful questions being raised about Lido’s dominance, which are real and worth reviewing.
We agree critics raise some valid concerns about risk factors that come from Lido’s control, but we don’t particularly believe this necessarily poses an existential threat to Ethereum. Should Lido go rogue and somehow steal all this staked Ethereum for themselves, we’d imagine the community would react quickly. Ethereum once rewrote history with the Ethereum Classic fork, and an existential failure related to the Merge™️ would probably cause another such intervention.
At the moment, we believe the optimal strategy is therefore to suck up to our new overlords in hopes they’ll stay benevolent. Most everybody concedes Lido’s lead in the staking wars is insurmountable.
The most credible alternative to Lido is Rocket Pool, which has been doing impressive work lately. In a world where they’d launched earlier, the staking wars may have been more competitive. Still, even so close to the Merge™️, their lower cap to launch a pool (16 vs 32 ETH) and overall ease of use is attracting a notable share of the last-minute staking market.
The team has also proposed a well-drafted consensus change to further reduce collateral requirements.
The Rocket Pool team appeared on Aladdin’s Twitter Space yesterday to offer thoughts on ETH staking and much more. Must-listen!
Perhaps a case of convergent evolution could stop the debate? Unlikely… nothing in this world is certain but death, taxes, and arguing on the internet.
Another potential alternative to Lido worth mentioning is ankrETH. ANKR launched fairly early but never caught fire. Yet with the ETH staking wars running hot, it’s receiving a second look.
The timeline for the Merge™️ has compacted from “years” to “months”, so we expect a lot more fireworks and questions of centralization.
Speaking of centralization… might Curve have a new boss?
USDD
As we recently surmised, the Sun King is indeed rising. The new USDD pool has launched. They now requested a gauge via an incredibly terse proposal. His Excellency owes no explanation.
Is the TRON founder and alleged international fugitive aiming to corner Curve?
For a sense of what sort of wealth might soon be hitting the flywheel, consider the effects the rising Sun has had on Ellipsis.
Keep a close eye on this discussion on the governance forums.
Stake DAO
Last week was Stake DAO’s turn in the barrel. The classy Crypto Risk Assessments team released a thorough review of their Liquid veCRV concept. Phenomenal read.