Lido’s Market Cap Surge- Is it a Bubble? Investigating Factors at Play

According to the latest Messari data, Lido’s market worth has increased dramatically in recent days. The increase in market capitalization was ascribed to the excitement surrounding the forthcoming Shanghai Hardfork on Ethereum.

However, this increase in market capitalization may not be sustainable in the long run.

Lido’s market worth has climbed by 47.7% in the last 14 days. However, over the last few months, the Lido protocol’s APR has slowly fallen for its users.

This drop in APR may affect interest in the Lido coin. Why? Of course, because it would be less appealing for users to stake their assets in Lido, thus leading to a decrease in TVL in the long run.

In truth, Lido’s TVL has increased dramatically in the last month, but a lowering APR may cause users to avoid the protocol, affecting Lido’s TVL in the long run.

According to Messari, the number of unique Lido protocol users has declined by 9.80% in the last 30 days. While Lido’s revenue continued to rise, it increased by 7.9% during the same period. Notably, a prolonged reduction in the number of unique users could have a long-term impact on Lido’s income and TVL.

Meanwhile, despite LDO’s increasing market worth, whales were losing interest in the coin. According to Santiment, the proportion of major addresses that have LDO has decreased in the recent month. Indeed, the reading of LDO’s network growth measure fell.

Furthermore, as the token’s velocity dropped drastically, so did its activity. A reduction in velocity indicates that the frequency with which the LDO token was exchanged between addresses has decreased over time.

Finally, Lido’s market cap increase could be fleeting. LDO was trading at $2.32 at the time of publication, up 0.27% in the previous 24 hours.