DeFi
Why the Lido LDO rallied after the resignation of Jump Crypto president Kanav Kariya – DL News
- Lido’s LDO token is up 7% since Jump Crypto’s president announced his departure on Monday.
- Some have blamed Jump for LDO’s disappointing performance over the past two years.
When Jump Crypto President Kanav Kariya announcement X, he would be leaving the high-speed trading firm, it prompted the usual flood of responses – industry luminaries wishing him luck in his next venture – and some that were not so usual.
At least two dozen people rejoiced: a great weight had been lifted from the Lido token LDO, they said on social media.
Indeed, the token is up sharply this week, rising more than 7% since Kariya’s announcement on Monday.
Maybe it wasn’t a coincidence.
During the “crypto winter” triggered by the collapse of Terra in May 2022, Jump Crypto sold more than 5 million LDO tokens, according to data from Arkham Intelligence. As of September 2022, the company has approximately 6 million LDOs. As of Tuesday, there were just over 500,000, worth about $1.4 million.
This two-year fire sale cemented Jump as a villain to LDO’s retail investors, who came to view the company’s constant selling as an albatross driving down the token’s price.
It is unclear whether Kariya was personally involved in Jump’s sale of LDO. He did not immediately respond to a request for comment.
“It’s both a joke and a bit true,” Will Sheehan, founder of crypto data firm Parsec Finance, said of the tweets celebrating Kariya’s departure. “Jump sold Lido until 2022 and 2023, and sometimes in cryptocurrency. [crypto Twitter] the joke becomes a real negative story.
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Lido is the largest decentralized finance protocol, with around $33 billion in user deposits, according to data from DefiLlama.
Lido is the largest decentralized finance protocol.
The protocol simplifies the process of “staking” Ether, or locking it in for an annualized return.
Lido also issues derivative tokens that track the value of the Ether deposited. These tokens are widely accepted in Ethereum’s DeFi ecosystem and allow users to avoid the opportunity cost associated with vanilla staking.
It was one of the most profitable protocols followed by DefiLlama, generating $100 million in fees over the last 30 days, second only to Ethereum itself.
Lido token
LDO is the protocol’s governance token and gives holders the right to propose and vote on changes to the Lido protocol.
But his performance was disappointing. Uniswap’s UNI token has a market cap of $7 billion, even though the protocol controls less than a fifth of the crypto deposited at Lido.
MakerDAO’s MKR token has a market cap of $2.2 billion, while Aave’s AAVE token is worth $1.3 billion. Both are much smaller than the Lido.
Some chose to blame Jump.
But LDO’s rally following Kariya’s departure can’t simply be attributed to a change in Jump’s top ranks, Sheehan cautioned.
“This coincides with some relative strength in old-school DeFi coins,” he noted.
In the last 24 hours, UNI, MKR and AAVE increased by 4.4%, 10% and 9.4% respectively. Sheehan said he wasn’t sure what sparked the rally in DeFi coins, but suggested it was a reaction to the memecoin fervor that has taken over the industry this year.
“It seems reactionary to the memes and the general hemorrhaging,” he said, “because these are real businesses that are much more countercyclical.”
Contact the author at aleks@dlnews.com.