Lido (LDO) Drops Nearly 10% Amid Rumors of Insider Trading

Lido (LDO), a liquid staking solution for proof-of-stake (PoS) networks, has experienced a significant price decline following a substantial offload of roughly 21.31 million LDO ($21.24 million). 

On-chain analyst EmberCN revealed that the sell-off is connected to a wallet linked to the Lido team. Additionally, the on-chain analyst noted that the suspected wallet transferred 3.5 million LDO ($3.1 million) to popular crypto exchanges including Binance, OKX, Bybit, and Gate. 

LDO Tanks Over 8% 

Following the announcement, the crypto asset saw a sharp decline of 8%, dropping from $1.16 to $0.8760. Over the last 7 days, LDO has tanked by over 21%. Despite the significant price decrease, the trading volume of the asset is up 74.72%.

Notably, the rise in trading volume reflects strong investor confidence in the digital asset. At the time of writing, the asset’s market capitalization was $784.79 million. However, the protocol has not disclosed further information regarding the incident. 

Lido DAO was founded in December 2022, shortly after the Ethereum 2.0 Beacon Chain became operational. At the time, staking on Ethereum posed several challenges. It required a minimum of 32 ETH, demanded significant technical expertise, and locked users’ funds for an extended period. 

In addition, these barriers made staking inaccessible to many users and prevented staked ETH from being used elsewhere in the DeFi ecosystem. While the protocol was initially focused on Ethereum, it has expanded to other blockchains.

Lido Allows Users Stake ETH

Lido provides a non-custodial staking protocol that issues stETH, a tokenized representation of staked ETH, which retains liquidity and can be integrated with other DeFi systems to mitigate capital lockup inefficiencies. 

Furthermore, the Lido protocol allows users to stake ETH by interacting with its smart contract on Ethereum 1.0. In exchange, they receive stETH tokens, which serve as liquid representations of their staked assets. 

Users can utilize these tokens in various DeFi protocols, including lending platforms. The issuance and redemption of stETH is managed through minting upon deposit and burning upon withdrawal. 

Meanwhile, 1 billion LDO tokens were minted upon launch. The token allocation includes 36.32% for DAO treasury, 22.18% for investors, 20% for the initial developers, 15% for founders and future employees, and 6.5% for validators and withdrawal key signers.