Lido is a liquid staking solution for Ethereum and other proof-of-stake (POS) blockchains. It allows users to stake without locking up their assets or having to maintain staking infrastructure.
When users stake through Lido, they receive a derivative token (Ex. stETH) for their staked assets. These derivative tokens can be used in various DeFi applications while the original assets continue to accrue block rewards.
While primarily known on Ethereum, Lido also supports other networks. The protocol aims to decentralize the staking process by distributing staked assets across multiple validators. The protocol is governed by LDO token holders through a decentralized autonomous organization (DAO).
Lido’s approach offers users flexibility and liquidity while still allowing them to participate in network validation to earn staking rewards. This has made it a popular choice, particularly in Ethereum.
Past
Lido was created by a group of blockchain developers and entrepreneurs to address the challenges of Ethereum staking, particularly the 32 ETH minimum requirement and the long lockup period.
The protocol officially launched in December 2020, coinciding with the launch of the Ethereum 2.0 Beacon Chain. Lido quickly gained popularity among Ethereum holders who wanted to participate in staking without the technical complexities or capital requirements of running their own validator nodes. By 2022, it had become the largest provider of liquid staking services for Ethereum, holding a significant portion of all staked ETH.
Present
The protocol remains the largest liquid staking platform for Ethereum, with a TVL of $24,205 billion, approximately 52% of the total LSTfi market, managing a substantial portion of all staked ETH. They offer liquid staking services for multiple blockchains, including Solana, Polygon, and Polkadot.
Lido’s staked tokens, particularly stETH, are widely integrated across DeFi ecosystems, used in various lending, borrowing, and yield generating protocols.
The Lido DAO actively manages the protocol, making decisions on upgrades, fee structures, and strategic direction and has been working on initiatives to increase decentralization and reduce systemic risks.
Future
Lido has stated its commitment to further decentralizing its operations and governance structure while navigating market dominance. Having already integrated multiple L1s, the protocol is expanding its L2 integrations in parallel.
As a market leader, Lido will continue innovating and as Ethereum undergoes further upgrades, their plans are to adapt and optimize services accordingly.
Strengthening their community involvement in governance and development is likely to remain a priority, and further integration of Lido assets into various DeFi protocols and applications, like Bracket, is expected.
Conclusion
Lido has established itself as a pioneering force in the liquid staking landscape, revolutionizing the way users participate in network validation and earn rewards across multiple blockchain networks. Since its inception in 2020, Lido has grown to become the dominant liquid staking protocol.
Key focus areas for Lido’s future include improving interoperability, strengthening community engagement, enhancing security measures, and potentially introducing new financial products and partners. These efforts reflect Lido’s ambition to maintain its market leadership while advancing decentralized principles and minimizing risk.
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