Lido is a staking solution for ETH 2.0 that is backed by several industry-leading staking providers. Users will receive a token when using Lido to stake their ETH on the Ethereum beacon chain. The Lido website is designed to solve problems mainly associated with initial ETH 2.0 staking – inaccessibility, illiquidity, and immovability. It helps make staked ETH liquid and allows participation with any amount of ETH. Users can stake their ETH without even locking their assets while participating in on-chain activities such as lending.
Lido allows its users to earn crypto staking rewards without even locking their assets or maintaining staking infrastructure. Instead, users will receive stETH tokens on a 1:1 basis representing their staked ETH. stETH balances are updated daily to reflect your ETH staking rewards and can be used as a regular ETH to earn yields and lending rewards. Moreover, there are no lock-ups or minimum deposits when staking with Lido. While using Lido, users will receive secure staking rewards in real-time, further securing Ethereum without the downside potential and associated risks. These rewards are then updated daily at 12 PM UTC.
It builds a liquid staking protocol for Ethereum. Competitors are well-known providers in the case of liquid stakings, such as centralized exchanges and other decentralized protocols like RocketPool. Lido DAO consists of many members with different backgrounds such as Semantic VC, Terra, Libertus Capital, Bitscale Capital, P2P Capital, StakeFish, StakingFacilities, ParaFi Capital, Chorus, and KR1.
Lido offers its users two tokens:
The stETH token represents Lido users’ deposits, slashing penalties, and the corresponding staking rewards. This is a liquid alternative for the staked Ether and could be transferred, traded, or used in DeFi applications. It can also be used in various decentralized financial products like it could be used as collateral.
Lido’s mission with the Lido DAO is to distribute all decision-making to create a trustless staking service built around community growth and self-sustainability. Users can buy this token from various popular exchanges such as Uniswap, DeversiFi, SushiSwap, Hotbit, Hoo, and Bilaxy.
Lido Finance offers staking as a service product to its users and provides a much more flexible solution than self-staking since it avoids freezing assets and maintains a validator node. In addition, Lido allows users to earn various rewards with a deposit as small as they want and even without restriction on the number of Ether deposited. The staking fee charged by the platform is 10%. Furthermore, you can choose to stake tokens from many networks present on the platform at the moment, such as Ethereum 2.0, Terra, and Solana.
You will receive a derivative token in a 1:1 ratio every time you stake a crypto asset on Lido. So, you will receive stETH if you stake ETH token and bLUNA if you stake LUNA on Anchor Protocol. Moreover, unlike staked Ether, the stETH token can be transferred at any time and free from all the limitations associated with a lack of liquidity.
The fee structure for Lido is not much complicated as it applies a 10% fee split between the DAO treasury, insurance funds, and Lido node operators. However, the DAO can change the fee structure after a successful vote. Lido’s fee level should make it a more profitable staking platform than other exchange staking alternatives in the crypto market.
Lido offers Ethereum staking rewards, but the rate can be variable and can change based on the total amount of ETH staked. APR decreases if the total amount of ETH that is staked is increased. It will have a maximum annual reward rate of 18.10%.
Security remains the most important question for users while choosing the perfect platform. However, with Lido, you all don’t need to be worried as there are several reasons to trust Lido Finance:
Lido provides a mobile version of its platform for users to make judicial use of Lido. Lido Wallet allows users to run multiple cryptocurrency wallets. It is a liquid staking solution for ETH 2.0 backed by industry-leading staking providers. The Lido mobile app users will have access to all its features through their user-friendly interface and the ability to stake and start a Masternode with one click.
Along with many boons of the platform, there also come some banes. While staking ETH using liquid staking protocols, several potential risks exist.
There could be a risk of smart contract vulnerability or a bug, but now the code is open-source and regularly audited to minimize the risk.
There is no surety that ETH 2.0 has been developed error-free as it is built atop experimental technology under active development. Therefore, there can be a stETH fluctuation and slashing risk.
Even though Ether staked via the Lido DAO is stored across multiple accounts and backed by a multi-signature to minimize the custody risk, signatories lose their key shares, go rogue, or get hacked can lead funds at significant risk.
Due to the withdrawal restrictions on Lido, users risk an exchange price of stETH, which is lower than the inherent value. Thus, this makes risk-free market-making and makes arbitrage impossible. Despite this, Lido is taking care to eliminate them to a possible extent.