Lido Finance Witnesses 10% Surge in TVL Despite First Net Outflows in Months

• Lido Finance’s Total Value Locked (TVL) surged by 10% to $16.15 billion, driven by ETH and MATIC price increases.
• Despite the gains, Lido faced its first net outflows, withdrawing 35,360 ETH, causing market concerns.
• Lido saw staking APR decline to 3.96%, but witnessed growth in bridged stETH on L2 platforms.

Lido Finance, the leading liquid staking protocol for Ethereum, experienced a significant uptick in its Total Value Locked (TVL) by almost 10% over the past week. The surge in TVL, amounting to approximately $16.15 billion at the time of reporting, was attributed to an 8% increase in Ethereum (ETH) and a 5% rise in Polygon (MATIC) prices between October 23 and 30. This surge marked an 11% increase in Lido’s TVL over the last month, according to data from DefiLlama.

However, amidst the soaring market values, Lido Finance faced a surprising challenge. For the first time in months, the protocol recorded net outflows. Data from Dune Analytics revealed a net withdrawal of 35,360 ETH between October 23 and 30, making Lido the protocol with the highest ETH withdrawals during this period. This surprising development raised concerns and speculation among investors and analysts, highlighting a shift in market dynamics for the protocol.

Additionally, the decline in Annual Percentage Rate (APR) earned from holding the protocol’s staked Ether [stETH] played a role in the outflows. Lido’s stETH APR plummeted to 3.96%, marking a staggering 101% decline since its peak at 7.17% on May 12. 

Despite the net outflows, Lido Finance witnessed growth in its deployments on prominent Layer 2 (L2) platforms. Data from Dune Analytics indicated a 5% and 7% increase in the amount of stETH bridged to Arbitrum [ARB] and Optimism [OP], respectively. However, Polygon experienced a 5% decline in bridged stETH during the same period, showcasing a varied response across different platforms.

Recently,  Lido on Solana, a key part of the Solana ecosystem, is starting to sunset its operations. This choice came after discussions and votes within the Lido DAO, based on a proposal by the P2P Validator team, which manages Lido on Solana.

The community had to decide whether to keep supporting the project financially or gracefully end it. After careful thinking, they chose the latter option, even though it’s a tough decision. This shows the community’s careful consideration and agreement on the best way forward for the project.