Lybra Finance used to be the leader in the LSDFi track, but recently it has fallen into the embarrassing situation of a sudden drop in total lock-up value (TVL) and a plunge in currency prices. This article will delve into the difficulties encountered by Lybra Finance, analyze the reasons behind it, and look forward to its future development direction.
Lybra Finance’s TVL plummets
Lybra Finance's TVL has seen a significant decline in recent days. According to data from DeFiLlama, Lybra Finance’s TVL fell from approximately $260 million to $76 million as of February 5, a drop of 69.7%. At the same time, Lybra Finance’s token LBR has also seen a significant price drop. According to data from CoinGecko, LBR price has fallen by approximately 51% in the past seven days.
The truth revealed by on-chain data analysis
Monitoring by the on-chain data analysis platform Spot On Chain shows that a large part of Lybra Finance’s TVL is contributed by a group of KOLs and anonymous addresses. These stalwarts appear to have recently withdrawn their staking portion and dumped all LBR tokens. Here are three noteworthy examples:
blurr.eth: Once staked more than 34,000 ETH (approximately $70 million), all tokens have been sold, and the last action was on January 15, 2024.
sifuvision.eth: Top 5 stakers holding over 6,000 ETH (~$13 million), dumped all tokens.
czsamsunsb.eth: once staked 4,000 ETH (approximately $8 million) and has sold all tokens.
Due to the selling behavior of large investors, Lybra Finance's interest-bearing stablecoin eUSD was recently unanchored to 0.88 USDT. The price of eUSD has been "underwater" since November last year.
Restaking Track Impact
The sudden drop in Lybra Finance data may have something to do with the popularity of the Restaking track. In recent times, the Restaking narrative has dominated the screen, and the point battles with different tricks have been dazzling. The endless new protocols have made investors say that "the ETH in their hands is not enough."
For example, the Ethereum restaking protocol EigenLayer saw its TVL surge rapidly in just a few hours after reopening the restaking window and temporarily lifting the staking cap of 200,000 ETH. According to data from DeFiLlama, after EigenLayer removed the deposit cap, its accumulated TVL has exceeded $3.21 billion. LSD protocol Puffer Finance has surpassed $450 million in just a few days after opening up token staking to allow point rewards and announcing an investment from Binance Labs. In addition, projects such as ether.fi, Kelp DAO, Renzo and Eigenpie are also very profitable.
Official response from Lybra Finance
Regarding recent market performance, Lybra Finance stated on the X platform that it has noticed a sudden decrease in TVL, which was caused by user behavior. The protocol is secure and user assets are not affected. However, the official attitude of "showing off" has also aroused dissatisfaction among the community. They believe that the official has not provided effective solutions and has been criticized for "inaction". Not only has the product failed to keep up with the pace of market development, but it has also failed to deliver products to the public in a timely manner. The community reveals future product plans.
community protests
The community's protests are not without reason. Since the release of the V2 version, Lybra Finance has not made any major market moves. In comparison, facing the market trend of Restaking/LRTFi, for example, Pendle, which is also on the LSDFi track, officially entered the Restaking field not long ago by launching ether.fi’s liquid pledge token eETH, and is providing users with more In addition to income and points opportunities, it also provides additional benefits such as swap fees and incentives to compete with other projects. Maverick Protocol has successively launched the liquid pledge token (LST) mesLBR of the revenue aggregator Match Finance and the wstETH of the Ethereum liquid pledge agreement Lido, etc., providing users with benefits such as points.
future outlook
For Lybra Finance, if it continues to ignore community demands and does not make any changes, it will further face the risk of losing funds and community trust. In order to regain the trust of the market and community, Lybra Finance needs to take proactive measures, including but not limited to:
Improve product competitiveness: accelerate product updates and iterations, and launch more new functions and products that meet market demand.
Strengthen community communication: promptly disclose future product plans to the community, listen to community opinions, and enhance community participation.
Introduce more incentives: Attract more users to participate in staking and investment by providing more income and points opportunities.
In short: Lybra Finance needs to make major improvements in product and community management to regain the trust and support of the market.