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The price performance of Lido Finance's token on the market made LDO the least desirable financial instrument to hold for any kind of investors, as it has been gradually losing its value throughout November and December. The most recent informative post from LookOnChain might explain the behavior of the asset on the market.
Selling pressure
According to the on-chain data, one of the earliest investors of Lido Finance sold almost $700,000 worth of LDO less than 24 hours ago, which could have been the main fuel for the most recent 8% price drop.
Stani Kulechov(@StaniKulechov) sold 715,000 $LDO($667,269) 16 hours ago.
— Lookonchain (@lookonchain) December 22, 2022
Stani Kulechov is one of the seed round investors of @LidoFinance.
And he has sold out all the 2M $LDO allocated on December 17, 2020 now.
His average selling price is $1.21.https://t.co/0AFwzS0Q6t pic.twitter.com/ukJbD6RN6Z
At this point, Stani Kulechov sold all the 2 million LDO allocated on Dec. 17, 2020, making up to $1.2 per token, which leaves him with more than $2 million in profit. Unfortunately, the success of a seed investor is a devastating loss for retail holders.
Problems with Lido
Since August 2022, LDO has been moving in a severe downtrend, losing more than 70% of its value in 2022. The only period in which Lido has been showing above average performance was the pre-Merge market era, when the DAO was one of the most popular ways of gaining liquidity with the staked Ethereum.
After the launch of Ethereum staking, Lido Finance faced a significant amount of pressure as investors raised questions about the business model utilized by the project. In exchange for staked Ethereum, Lido provides investors with a token, which is essentially a liquid representation of their locked assets. Considering the centralized nature of the token issuance, the decentralization of the whole Ethereum staking enterprise faces certain risks that may become a problem in the future.
Alex Dovbnya
