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Why Lido LDO Rebounded After Jump Crypto President Kanav Kariya Resigned – DL News
- Lido’s LDO token is up 7% since Jump Crypto’s president announced his resignation on Monday.
- Some have blamed Jump for LDO’s disappointing performance over the past two years.
When Jump Crypto president Kanav Kariya announced on Day
At least two dozen people rejoiced: a large weight has been lifted from Lido’s LDO token, they said on social media.
In fact, the token has been on a tear this week, rising more than 7% since Kariya’s announcement on Monday.
It may not have been a coincidence.
During the “crypto winter” triggered by Terra’s collapse in May 2022, Jump Crypto sold more than 5 million LDO tokens, according to data from Arkham Intelligence. As of September 2022, the company had approximately 6 million LDOs. As of Tuesday, there were just over 500,000, worth about $1.4 million.
That two-year sell-off cemented Jump as a villain to LDO retail investors who came to see the company’s constant sales as an albatross depressing 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 a mix between a joke and a little bit of truth,” Will Sheehan, founder of crypto data firm Parsec Finance, said of the tweets celebrating Kariya’s departure. “Jump was selling Lido through 2022 and 2023, and sometimes in cryptocurrency at [crypto Twitter] the joke becomes a real negative narrative.
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Lido is the largest decentralized finance protocol, with around $33 billion in user deposits, according to DefiLlama data.
Lido is the largest decentralized finance protocol.
The protocol simplifies the process of “staking” Ether or locking it up for an annualized return.
Lido also issues derivative tokens that track the value of the Ether deposited. These tokens are widely accepted in the Ethereum DeFi ecosystem and allow users to avoid the opportunity cost of vanilla staking.
It has been among the most profitable protocols tracked by DefiLlama, generating $100 million in fees over the past 30 days, second only to Ethereum itself.
The Lido token
LDO is the governance token of the protocol and gives holders the right to propose and vote on changes to the Lido protocol.
But his performances were disappointing. Uniswap’s UNI token has a market capitalization of $7 billion, even though the protocol controls less than a fifth of the cryptocurrencies deposited at Lido.
MakerDAO’s MKR token has a market capitalization of $2.2 billion, while Aave’s AAVE token is worth $1.3 billion. Both are much smaller than the Lido.
Some chose to place the blame on Jump.
But LDO’s rally in the wake of Kariya’s departure can’t simply be attributed to a change in Jump’s leadership, Sheehan cautioned.
“It coincides with some relative strength of old-school DeFi coins,” he noted.
Over the past 24 hours, UNI, MKR and AAVE have increased by 4.4%, 10% and 9.4% respectively. Sheehan said he wasn’t sure what sparked the rally in DeFi coins, but said it was a reaction to the memecoin fervor that has taken over the industry this year.
“It seems reactionary to memes and alternative bleeding in general,” he said, “because these are real businesses that are much more countercyclical.”
Contact the writer at aleks@dlnews.com.