Leading decentralized lending protocol MakerDAO has lost its dominance in the DeFi market as liquid staking protocol Lido Finance claimed the top spot with the highest total value locked (TVL).
According to data from the DeFi market aggregator, DeFiLlama, Lido Finance currently has $5.9 billion in TVL, with MakerDAO and AAVE taking second and third place with $5.89 billion and $3.7 billion, respectively.
Ethereum Merge Fuels Demand for Staking Solutions
The spike in Lido’s TVL has been attributed to the massive increase in demand for Ethereum staking solutions. According to a recent Nansen report, the Ethereum Merge, which marked the network’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS), resulted in high demand for such solutions.
Lido Finance has leveraged this opportunity to solidify its position within the industry and has now emerged as the top DeFi protocol.
As per the Nansen report, Lido currently holds the highest amount of staked ETH, approximately 31%. This is a significant dominance compared to the market share of major crypto exchanges, including Coinbase and Kraken, which hold 15% and 8.5%, respectively.
According to the protocol’s official website, Lido Finance currently has $5.8 billion of staked Ether. On the other hand, there are around $43.9 million of staked ETH on Polygon, $23.2 million on Solana, $11 million on Polkadot, and $2.2 million on Kusama.
DeFi TVL Records Major Crash
The DeFi market witnessed a major decline in its TVL over the past year, losing more than 70% of its value, with a drop from over $167 billion recorded in January 2022 to $38.6 billion at the time of writing.
The increased rate of hacks and cybercriminals in the DeFi space also contributed to the overall decline in the sector. According to reports, DeFi protocols suffered the most losses in 2022, with the largest exploit being the Ronin bridge hack, which saw attackers stealing over $620 million worth of digital assets.
While DeFi yields remain suppressed across the board, the market has shown remarkable resilience in light of what is now known as the most severe bear market in crypto.
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