The price of Lido DAO (LDO) has rebounded to its three-week high of $2.21 as of May 16, up 40% when measured from its local low of $1.57, established four days ago.
This impressive double-digit recovery appeared in tandem with other top-ranking crypto assets, including Bitcoin (BTC) and Ether (ETH). However, LDO has greatly outperformed the broader crypto market (TOTAL) that’s up only 4.5% since May 12.
But what are the reasons why Lido DAO is outperforming the rest of the cryptocurrency market right now? Let’s take a closer look at the three biggest factors likely driving up LDO price.
Ethereum depositors’ return after Shapella
The LDO price recovery coincides with the net positive inflows into Ethereum’s proof-of-stake (PoS) contract in recent days.
Lido DAO is primarily an Ethereum liquid staking platform. It enables users to pool their funds to become validators on Ethereum, thus bypassing the network’s requirement of depositing at least 32 ETH.
In April, Ethereum underwent a network upgrade called Shapella, which supports reward withdrawals from its staking contract. As a result, its PoS contract witnessed days when the amount of ETH withdrawals outnumbered deposits.
For instance, the net ETH staked with its PoS contract were 19.27 million ETH on April 11, a day before the Shapella upgrade. The number fell to 90,704 a week later, followed by a consistent recovery, according to data tracked by Nansen.
As of May 16, the Ethereum PoS contract had over 20 million ETH, underscoring the growing demand for liquid staking service providers like Lido DAO. The price of its governance token LDO likely benefited from the narrative.
For instance, Lido DAO’s nearest competitor, RocketPool (RPL), has also soared 15% to around $50 when measured from its May 12 low.
Lido V2 mainnet launch
It should be noted that Lido DAO did not support full ETH withdrawals. Instead, it issued staked Ethereum (stETH), theoretically pegged to ETH by 1:1, to users that could be exchanged freely for other crypto assets across exchanges.
But that was until recently.
On May 15, Lido DAO launched the mainnet version of “Lido V2,” which enables Ethereum stakers to burn their stETH and exit the protocol at a 1:1 ratio. Since the upgrade, LDO price has climbed 20%, or half of its 40% rebound thus far.
Related: Celsius moves $781M in stETH…
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