Lido Finance, a decentralized finance (DeFi) platform built on the Ethereum blockchain, has recently raised $30 million in a “paradigm” round of funding, drawing attention to the project and causing a rise in the price of its token, $LDO. However, only some are convinced that Lido is a good investment. In a tweet, Crypto Condom, a cryptocurrency analyst, described Lido as a “time bomb” and warned of potentially significant sell pressure on the LDO token in the near future.
I care. I wouldnt touch $LDO with a 10ft pole rn.
Not only does it not pay yield, its Paradigm round is unlocking 273k $LDO EVERY DAY x 6 months from a VC price of $0.73.
TLDR: 8.46m $LDO ($9.3m sell pressure) q 30days
👉IMO, when price is near $0.73 it'll be a good buy https://t.co/mXL6YBvH8r pic.twitter.com/cxGJgG0FQJ— CryptoCondom (@crypto_condom) January 1, 2023
One factor contributing to this sell pressure is that a large percentage of Lido’s tokens are set to be unlocked in the coming days. Specifically, 2% of LDO’s average daily trading volume will be unlocked, which could add to the downside pressure on the token’s price. This is particularly significant because the paradigm round of funding made up 10% of all LDO tokens.
It’s worth noting that Lido has received support from some prominent figures in the cryptocurrency space, including Spencer Noon, a partner at DTC Capital. The platform has received praise for its emphasis on decentralized exchanges and liquidity pools, with Noon referring to Lido as “the most promising project in DeFi.”
However, the potential for selling pressure makes Lido a risky investment for some. As with any cryptocurrency, it’s crucial for investors to conduct extensive research on a project before making a choice, especially for newer or less well-known projects like Lido.
In addition to the concerns raised by Crypto Condom, it’s worth considering some of the broader risks associated with DeFi projects in general. While the growth of DeFi has brought significant innovation and opportunity, it has also attracted scammers and hackers looking to take advantage of inexperienced investors.
One high-profile example of this is the case of Harvest Finance, a DeFi platform that suffered a $24 million hack in October 2020. Though Lido has yet to suffer a hack, its tokenomics make it prone to an unavoidable dump.
It’s important for investors to be aware of these risks and to do their due diligence before investing in any DeFi project, including Lido. This may involve examining the team behind the project, the technology it is built on, and the potential vulnerabilities it may face.
While Lido Finance’s recent funding round has attracted attention and support and the company focuses on decentralized exchanges and liquidity pools, there are legitimate questions about the company’s long-term prospects. The potential for sell pressure and the uncertain performance of Ethereum, as well as the broader risks associated with DeFi, make it a risky investment for some. Like with any investment, it’s crucial to consider the potential risks and rewards before making a decision.
