Originally designed as an Ethereum staking solution, the Lido decentralized autonomous organization (DAO) was established on December 19, 2020. Later it turned into a decentralized staking platform supporting ETH 2.0, Terra, Solana, Kusama, and Polygon. The other cryptocurrencies were added later as well. At the time of writing, this is the market leader for Ethereum liquid staking that takes a great share of all staked ethers.
The project offers a simplified and secure staking option for digital assets, in which the annual percentage rate (APR) depends on the chosen token. Rewards are proportional to the size of the user's stake compared to the total amount of the locked coins while the balances are updated on a daily basis. The minimum deposits for staking are not defined, and participants are not required to maintain the platform’s infrastructure which significantly reduces the entry barriers for newcomers. Since users have the right to unstake their crypto at any time, they do not need to worry about a long-term lock-up.
The key goal of the Lido project is to give cryptocurrency investors an opportunity to stake ETH without losing the ability to trade or use their tokens for other purposes. In particular, when a certain amount of tokens is staked, it is replaced by derivative tokens stETH, stLUNA, or stSOL in the investor’s wallet correspondingly. This allows users to make a profit without fully locking their assets. At this, the rewards are paid out in the form of the platform’s derivative tokens.
Besides, the project offers a referral program as a way to earn additional money and attract more users. It’s worth stating that only whitelisted referrals can participate in it and receive rewards as it helps to improve the security of the program.
There are two tokens mentioned in the documentation on the official Lido website: stETH and LDO. But in fact, there are more as each token available for staking comes with its ERC20 derivative. Thus, stETH replaces ETH, stMATIC replaces MATIC, stKSM is used for KSM, stSOL for SOL, and stLuna for Luna. The number of such derivative tokens grows with each token added to the list of supported assets.
When staking crypto, users mint staked tokens which are pegged at a 1:1 ratio to the initial stake. These tokens can be used in the same way as their doubles i.e. they allow clients to earn staking rewards while still being used across the DeFi ecosystem. This feature is intended to overcome the problem of illiquidity by providing a solution for liquid staking. The platform charges 10% of the staking reward as a fee.
The LDO token
LDO is a utility token of the Lido network used for governance purposes. It was launched simultaneously with the start of the project as 1 billion LDO tokens were minted at that time. They grant users governance power in the Lido DAO to add and remove Lido node operators, manage fee parameters and distribution, and vote on app upgrades.
The maximum LDO supply is capped at 1 billion tokens. They were distributed in the following way: 36.32% went to the DAO treasury, 22.18% was reserved for investors, 6.5% is intended for validators and signature holders, 20% was left for initial Lido developers, and 15% was reserved for founders and future employees. Users can buy or trade LDO on some popular exchanges such as Uniswap, AAX, BKEX, Hoo, Sushiswap, CoinEx, and more.
Voting on Lido
All holders of LDO collectively act as Lido’s decision-making entity. They make all decisions linked to the project performance, including the least and the most important ones. It is even supposed that DAO will decide on when LDO tokens will be marketed from the treasury.
To realize their voting rights in the Lido DAO, token holders should put tokens into the Lido voting contract. Each DAO member can submit a proposal for the DAO to vote on. The voting power of token holders is proportional to the number of tokens locked in the contract. The more LDO tokens are locked in a user’s voting contract, the greater decision-making power the voter gains and the more chances he or she has to influence the outcomes.
Lido team treats the security of its platform and clients’ money very seriously. Therefore, the underlying code has been audited at least three times by the companies well-known in blockchain security: Quantstamp, MixBytes, and Sigmaprime. Their reports are publicly available on the platform for anyone to check. In addition, Lido has launched a bug bounty program, which stimulates users to find vulnerabilities in the project and helps to keep the platform secure from new potential attacks. Besides, the project is represented on various social media channels such as Telegram, Twitter, Github, Reddit, and Discord. All accounts and groups, as well as the project’s blog, are regularly updated with new posts. At this, such transparency lends credibility to the platform.
There is no information about the founders of the project available on the official website. The data that can be founded on other websites is also pretty scarce. Konstantin Lomashuk is mentioned in several third-party interviews as a project’s co-founder. He is an entrepreneur and genesis investor, and he is also a member of Lido DAO. Prior to Lido, he became a founder and co-founder of several other projects: Commun, Satoshi Fund, P2P Validator.