About

Lido is primarily a liquid staking solution for Ethereum and Polygon. Products offered include liquid staking derivative token contracts and other auxiliary smart contract infrastructure to support native token staking services.

Lido’s smart contracts allow users to stake ETH on Ethereum and ERC-20 MATIC on Ethereum to receive the corresponding liquid staking derivative token (i.e., st[token]). The protocol then uses these staked tokens to operate validators on the underlying network, increasing participation in each network’s Proof-of-Stake (PoS) consensus mechanism. As such, Lido’s staking solutions are typically meant for users that are unable to run a validator themselves due to economic or technical limitations.

History

In October 2020, Lido was introduced through a blog post outlining the flaws and inefficiencies of then-available ETH staking solutions on Ethereum’s Beacon Chain. Jordan Fish, Vasiliy Shapovalov, and Konstantin Lomashuk founded Lido and its DAO to solve the shortcomings of staking, such as illiquidity and high minimum staking requirements (e.g., Ethereum requiring at least 32.00 ETH to operate a validator). With the introduction of its first liquid staking derivative token, stETH, staked capital could be used in Decentralized Finance (DeFi) applications. The project’s initial team members raised $2.00 million in December 2020 to continue building the protocol.

On Dec. 18, 2020, the liquid staking protocol went live on Ethereum and later expanded to support Polygon, Solana, Terra, Kusama, and Polkadot. However, it is worth noting that:

• Following Terra's collapse in May 2022, the Lido DAO voted to discontinue Terra staking and the stLUNA token. Terra staking was officially shut down on August 27, 2022.
• Support for Kusama and Polkadot was sunset on Aug. 1, 2023. As of May 2024, the only function on these networks is to claim DOT and KSM tokens that were previously unstaked by the project team.
• Lido on Solana frontend support ceased on Feb. 4, 2024, with stSOL unstaking only available via Command Line Interface (CLI). Support for staking SOL on Solana was discontinued on Oct. 16, 2023.

On Feb. 19, 2021, Lido deployed the wstETH token (wrapped staked ETH) on Ethereum. The project then launched support for bridging the token to Arbitrum and Optimism on Oct. 6, 2022. In addition, the wstETH bridge to Cosmos via Neutron was launched on Sept. 28, 2023, and the wstETH bridging contract on Base (ERC-20 equivalent) deployed the same day. On Oct. 13, 2023, wstETH bridging contracts on BNB Smart Chain (BEP-20), Avalanche (ARC-20), and Scroll (ERC-20 equivalent) were deployed. Bridging contracts have also been deployed on Mantle (July 14, 2023), Linea (Aug. 3, 2023), and zkSync (Jan. 3, 2024).

In April 2023, Ethereum underwent the Shapella (Shanghai + Capella) upgrade, which enabled Beacon Chain validators to withdraw staked ETH and earned ETH rewards. On May 15, 2023, the Lido V2 upgrade went live, launching a dashboard for users to exchange stETH for ETH directly through the protocol. In addition, V2 made architectural changes to Lido’s operator registry by introducing a staking router, a smart contract that distributes stake and rewards among Lido’s node operators.

In October 2023, Lido added seven new node operators on Ethereum, increasing its node operator set from 31 to 38. As of May 2024, Lido has 39 node operators approved by Lido DAO under its Curated Module, following an approved Snapshot proposal on Dec. 14, 2023, that reinstated “InfStones.”

In Q4 2023, Lido DAO passed several notable Snapshot proposals to make changes to the protocol and signal support for future changes.

• On Nov. 2, 2023, a Snapshot proposal was approved, formalizing Lido DAO’s goals for 2024-2026. A full description of which can be seen here. Notably, the project team intends “to add 5000 NOs [Node Operators] total through permissionless staking modules, DVT modules, and more.”
• On Nov. 2, 2023, a Snapshot proposal was approved, signaling support to deploy a “Simple DVT” module, continuing on Lido DAO’s previously announced developmental plans to decentralize node operations by adopting Distributed Validator Technology (DVT). DVT groups validators into independent committees that can propose and attest to blocks together, reducing the risk of an individual validator underperforming or misbehaving. Technically, this is done by splitting the signing keys for a given validator across several different nodes that must reach a consensus on the validator’s operations.
• On Dec. 14, 2023, a Snapshot proposal was approved, signaling support for a “Community Staking Module” that, if implemented, would “introduce permissionless entry to the Lido on Ethereum validator set with an ETH bond requirement.” According to Lido DAO’s December 2023 monthly report, the project team “will proceed with further research, development, and security audits, anticipating a mainnet release by the end of 2024.” A full architectural overview of the intended CSM can be seen here.
• On Dec. 25, 2023, respective Snapshot proposals passed, officially recognizing bridged wstETH on zkSync, Mantle, and Linea by Lido DAO.

On April 16, 2024, the project team announced its Simple DVT module (sDVTm) had been deployed with 12 clusters of initially onboarded (Obol Cohort 1) validators. Each of the 12 initial clusters will have five active validators. Following the deployment, all new ETH received by Lido will be deposited into the sDVTm until it either runs out of depositable validators or reaches capacity. Initially, sDVTm is capped at 0.50% of the total Lido stake (with the ability to be increased via DAO votes) and hopes to add 250 new node operators to the protocol. sDVTM is designed to allow solo and community stakers to participate in running validators using Lido by leveraging the Curated Operator Module and DVT solutions provided by Obol and SSV Network. sDVTM is first being implemented with Obol-based distributed validators (DVs), with SSV Network DVs to be introduced after. The project team intends to wind down sDVTm within three years, during which the release of “more scalable DVT modules with permissionless elements” is intended.

On April 25, 2024, a Snapshot proposal was approved regarding dual governance that would add protocol governance functionality to the stETH token. Implementation of dual governance would allow the locking of stETH, wstETH, and unstETH (an NFT representing a user’s withdrawal position) into a veto-signaling escrow smart contract to initiate a governance execution pause, thereby allowing such protocol participants to withdraw ETH before an approved protocol change is implemented. It is important to note that dual governance does not cover emergency actions triggered by the circuit breaker committees and contracts or DAO decisions related to spending and managing the treasury. On April 18, 2024, the project team announced that they intend to implement this mechanism “sometime in Q4” if approved by governance. As of May 2024, an onchain vote for the proposal has yet to occur.