The Shanghai upgrade is fast approaching, and Ethereum whales can’t keep calm. Lido finance total value locked (TVL) recently passed that of MakerDAO and today tops the market at $7.6 billion, accounting for 16.96% of the entire DeFi TVL.
TVL is the total on-chain measure of funds held in a protocol’s smart contract. Analysts attribute the rapid hike in TVL to LSD (Liquid staked derivatives). Other protocols that benefit include ANKR and Rocket pool.
Decrypting the whale move
Ethereum developers are warming up ahead of a critical upgrade to the network called the Shanghai upgrade. Shanghai is the second major upgrade after the Merge on Ethereum.
The merge was Ethereum’s move from the power-hungry proof-of-work consensus mechanism to the Beacon chain that uses a proof-of-stake (POS) consensus mechanism.
POS requires validators to validate Ethereum chain transactions after staking 32 ETH on the Ethereum contract. The 32 ETH (about $53,400) is a substantial amount, and that’s where LSDs come in.
LSD on platforms like Lido Finance allowed crypto degens to stake lower quantities of Ethereum for passive income. In return for staked ETH, the platform gives you a token/ LSD that represents your staked ETH on the contract. E.g., stakedETH (sETH) for ETH staked. sETH earns staking rewards, and you can use it for other DeFi functions.
According to Defillama, LSDs earn up to 57% APY and occasionally break above the 300% mark.
The staked tokens, however, can only be redeemed once the Shanghai upgrade is complete.
After the upgrade, users can redeem their LSDs, and validators can unstake their 32ETH. The upgrade is now in sight, and staking risks have dropped considerably.
Affected tokens
The week has been heady for most cryptocurrencies, with the global market cap breaking the $1 trillion barrier. Coins like BTC, GALA, SOL, and ETH are making impressive market gains.
BTC, the OG, now has a higher market value than Facebook (META) and MasterCard.
Tokens behind LSD projects like ANKR, Rocket pool, and Lido Finance have soared for the past week.
According to Coinmarketcap, Lido’s LDO is currently trading at $2.17, up 8% in 24 hours and up 150% year to date. Ankr is up 7.8% in 24 hours and up 50% year to date. Rocket pool token has shared similar returns and is up 9% in 24 hours and up 50% year to date.
Other tokens to be on the lookout for include StaFi FIS, PSTAKE, Frax Share FXS, and StakeWise. All these tokens are registering impressive returns ahead of the Shanghai upgrade.
Crypto market outlook
Despite the positive market sentiment in 2023, coins remain far from their previous high in 2021 and 2022.
The market, however, remains choppy; according to Coinglass, in the past 24 hours, crypto exchange liquidated 136,710 traders. The total liquidations come in at $736.86 million. The most significant single liquidation order happened on Huobi – BTC-USDT value of $6.84 million.
Ethereum, on the other hand, is trading at $1,528, up 5% in 24 hours. Through chart price analysis, we can deduce rising price momentum from the MACD histogram; the MACD and signal lines are moving up and green candles so prices could climb higher. The 14- day Relative Strength Index shows the coin is trading in overbought territory.
The crypto winter, ecosystem developments, and FUD have played a significant part in the market’s performance this year. Is the bear market over? It is still too early to tell, and the market should steer clear above the $1 trillion value for us to start making conclusions.
