There’s no denying Ethereum and DeFi (Decentralized Finance) are two entities in the world of crypto that have great expectations. As the Ethereum merge progresses, the opportunity for projects to fill financial needs in Ethereum’s DeFi ecosystem open. One such project in Ethereum’s DeFi network is Lido DAO (Decentralized Autonomous Organization).
Launched in December 2020, Lido DAO is a liquid staking community for Ethereum** focusing on rewarding users without the need for locked-in assets.
Liquid Staking
Lido DAO is built around its liquid staking protocol. With liquid staking as one of the newest financial utilties in crypto and blockchain, it is mostly untested territory. This requires a great combined effort of developers, coders, and other blockchain specialists in order to build a compatible protocol. Lido DAO has done just that in creating a thoroughly engineered system for multi channel liquid staking, accessible primarily on Ethereum, but also Polygon, Polkadot, Kusama, and Solana just to name a few.
As the No.1 ranked liquid staking service in crypto, Lido DAO separates itself in one major way – it doesn’t lock or freeze assets. As Ethereum progresses from PoS to PoW, the constant state of limbo between these two methods hinders other staking options. Most are locked for set periods or even frozen until months after the Ethereum merge is 100% complete, leaving their assets unusable and untouchable.
Lido DAO however is different. It uses smart contracts to ensure precision across all staking methods. A compatible Ethereum token is deposited through these smart contracts and traded for stETH, which is only accessible through this process. The stETH token represents a tokenized staking deposit. The stETH token is free from limitations associated with general staking allocations such as a minimum deposit to earn, or locked-in stakes that require a validator node. It does this through two ways:
A 10% fee on entry stakes.
Low network cost as it makes use of smart contracts rather than requiring costly security measures.
It compensates in its freedom of use and competitive rewards. The 10% fee is likely to be removed by the DAO once the merge is complete and the amassed community can leverage other Ethereum benefits to achieve almost zero cost. Users can earn on any stake they make while still being able to freely use their stETH for any compatible services, tools, or applications on Ethereum, Polkadot, and other expanded ecosystems.
Lido DAO future trajectory
Lido has several goals where it aims to achieve 100% efficiency:
Staking rewards without any fee or lock in term.
Earn rewards on all deposits no matter the size.
Software impenetrability in order to protect assets in case of 2rd party attack or user failure.
Provide the best alternatives to self-staking, exchange staking, and semi-custodial investments.
Set stETH as the collateral standard on Ethereum once the merge is complete and establish new lending and DeFi options.
Lido DAO has a total of $6.65 billion assets staked currently, and has created a total of $168 million in rewards for users in less than 1½ years.
**Side note – Ethereum is already the biggest staking economy in crypto and set to dominate the space with the completion of the Ethereum merge.
