- Members of Lido’s governance body are considering a new proposal to discontinue the protocol’s operations on Polygon.
- The demand for MATIC has plummeted in the past ten days.
In the wake of Lido Finance’s [LDO] withdrawal from the Solana [SOL] network, a proposal has surfaced among community members to sunset the liquid staking protocol on leading Layer 2 (L2) blockchain Polygon [MATIC].
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The proposal’s author Kentie highlighted a number of reasons for the suggestion made. According to Kentie, the total value locked (TVL) on Polygon is around $86 million. And the network generates annual fees of $166,863 for Lido DAO.
Considering the substantial LDO token incentives spent over the past year, the author argued that the return on investment (ROI) is inadequate.
Kentie noted further that Lido’s reputation may be at risk due to a technical bug that halted withdrawals on the protocol’s Polygon deployment for 25 days.
“While we were fortunate to have no FUD around this period, this seems to pose a reputational risk to a protocol with $15B in assets,” the proposal stated.
Additionally, the expensive compensation structure for Shard Labs, the uncertainties in Polygon’s roadmap, coupled with limited competition in the liquid staking market on Polygon, were the other reasons cited by Kentie in support of the proposal to sunset Lido on Polygon.
The author added,
“In short, I propose to sunset Lido on Polygon to become a native ETH liquid staking provider and avoid assuming risks from smaller pockets of TVL.”
Short-selling on the daily market
At press time, the price per MATIC coin was $0.5232, according to data from CoinMarketCap. Price movements observed on a daily chart revealed a pattern of short-selling amongst daily traders on the coin’s spot market since 11 October.
Moreover, it’s True Strength Index indicator (TSI), which tracks the strength of a trend, confirmed this.
Readings from the indicator showed that the TSI line crossed below the signal line on 11 October. It has been positioned underneath the signal line since then. Traders typically look out for this downward crossover to commence profit-taking activity and to open short positions.
With key momentum indicators spotted below their respective neutral lines, MATIC has witnessed significant sell-offs in the past ten days. The coin’s Relative Strength Index (RSI) was 48.04 at press time. Its Money Flow Index (MFI) inched closer to the oversold zone at 34.90.
Read Polygon’s [MATIC] Price Prediction 2023-24
Likewise, trending downwards at press time, the coin’s Chaikin Money Flow (CMF) returned a negative value of -0.19.
A declining CMF indicates that an asset’s selling pressure outpaces buying momentum as liquidity gets removed from the market.
Source: MATIC/USDT on TradingView
