The decentralized finance protocol has experienced just 11 profitable months since its launch in December 2020, with six of those coming within the last year.
Lido’s flagship product stETH has a market cap of $38.5 billion.
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Posted December 17, 2024 at 6:03 pm EST.
Lido Finance, the decentralized protocol that introduced liquid staking, turned four years old on Tuesday and is currently on pace to generate a yearly profit for the first time since its inception.
Lido’s net revenue stands at over $99 million in 2024, while its cost and expenses total roughly $94 million, making the protocol’s income $5 million, according to data from a Dune Analytics dashboard curated by crypto advisory and consulting firm Steakhouse Financial, which also helps create financial statements for Lido.
2024 marks the first time Lido has had a positive income level, except for the protocol’s first year in 2020 when its income was less than $400. Total protocol income in 2021 was nearly -$191 million, while 2022 and 2023 had a combined income of -$153.8 million, per Steakhouse’s dashboard. Since its inception in Dec. 2020, Lido has only had 11 profitable months with six of them occurring in the past year.
The change is a “significant turnaround,” that was a result of increased demand for ETH staking in light of the launch of restaking protocol EigenLayer in 2024, argued Hitesh Malviya, founder of crypto analytical tool Dyor and contributor of blockchain project Nillion, on X early Sunday.
However, Adrian Vasiljevic, the co-founder of Steakhouse Financial, told Unchained that the surplus revenue that Lido accumulates in a given calendar year is “largely a reflection of ETH price movements.” Year-to-date, the price of ETH has increased about 67% from $2,350 to under $4,000 at the time of writing.
Read More: DeFi Protocols Such as Lido Are Generating More Fees Than Layer 1 Blockchains
Chosen by Retail and Institutional Users
Lido, the largest DeFi protocol, has seen its total value locked increase by 5% in 2024 from less than 9.4 million ETH at the start of January to over 9.81 million ETH worth about $38.7 billion at presstime. With the current amount of ETH staked through Lido’s smart contracts, the liquid staking titan controls nearly 28.5% of total ETH staked, according to data from a different Dune dashboard created by Hildobby.
Through its flagship product stETH, Lido jumpstarted the liquid staking sector, which enables crypto users to stake their ETH while maintaining liquidity to participate in various DeFi activities such as providing liquidity and supplying collateral. Lido’s stETH represents a crypto user’s staked ETH plus rewards from aiding the security of the Ethereum blockchain.
“The protocol has become the clear choice for users across the spectrum, from retail web3 participants to regulated institutional players entering Ethereum for the first time,” Vasiljevic wrote to Unchained in Telegram. “Today, we estimate that around 25% of Lido’s TVL comes from professional, institutional, or regulated users—solidifying its market leadership in that segment as it enters a new phase of growth.”
Lido’s fourth birthday comes the day after the protocol started its process of sunsetting its services on the Polygon network. “The Lido on Polygon sunset process is taking place following extensive discussions across [the] Lido DAO forum and a governance vote by LDO token holders,” wrote the Lido team on X Monday morning. “A strategic refocus on Ethereum and lack of scalability on Polygon POS has led to the discontinuation of staking services on the respective network.” (Lido isn’t the only protocol to leave or consider leaving Polygon, with Aave weighing whether to do the same both for its lending services and DAO voting.)
Further Signs of Maturing
Lido’s anniversary also comes roughly two months after Lido activated a new community staking software module on Ethereum mainnet, which allowed community stakers to join as node operators without needing permission. Since Lido first entered the crypto scene, the protocol’s DAO screened all the firms and parties that wanted to serve as node operators.
Read More: Lido Moves to Decentralize With Vote to Adopt New Community Staking Module
The price of Lido’s native governance token LDO has decreased 7.7% in the last 24 hours but has grown 82% over the past 30 days to trade at $2.11, giving it a market cap of nearly $1.9 billion, per CoinGecko.
