• The unlocking of Lido withdrawals could result in even larger queues, moving forward.

  • As staker APR rises, overall activity on the protocol increases.

Lido [LDO] has been dominating the DeFi market for quite some time now. After the protocol took the first place from MakerDAO [MKR] in terms of TVL, the former has been making more and more improvements to its network.

However, Lido’s impending exit could have a stressful effect on the protocol. According to Tom Wan, a research analyst at 21Shares, withdrawals on Lido will impact queues on the network.

The Lido queue refers to the number of users who have requested to withdraw their staked Ethereum from the Lido protocol. These users must wait in line until their withdrawal requests are processed. However, this may take some time, depending on the number of requests and the amount being withdrawn.

According to Tom, if 10% of users request to withdraw their funds, the protocol has a reward buffer and daily deposits to cover these withdrawals without having to liquidate too much of the collateral assets on the network.

If the number of unstaking requests exceeds 10%, it may cause a large number of validators to exit, which may lead to longer withdrawal queues.

At press time, there were 507,000 partial withdrawals and 1,100 full withdrawals pending on Lido.

Status of Lido Agreement

In terms of activity, the protocol observed an 80.6% increase in the number of daily active users in the last week. The surge in activity led to a surge in revenue, which increased by 11% over the same period.

The protocol’s increased activity can be attributed to Lido’s APR (annual percentage rate), which reached 8.31 last month. A high APR can encourage users to stake their Ethereum [ETH] to Lido and earn higher returns.

These factors have led to an increase in interest in stETH. Last week, stETH’s network growth exceeded that of the LDO token, indicating that users are more interested in stETH than the protocol’s token itself.

Additionally, whales’ interest in stETH also exceeds that in LDO, indicating that many addresses have confidence in the Lido protocol’s staking services.