While Ethereum moves toward a completely PoS ecosystem, there’s been one problem that’s remained evergreen: liquidity. Conventional staking keeps consumers’ funds tied up for long stretches of time, which isn’t very capital efficient. Liquid staking filled the void—and Lido is the largest protocol in the sector.

*Lido (LDO): The Leading Liquid Staking Protocol on Ethereum*

Here, Lido and how it operates will be explained. We’ll also see why Lido has become a staple of the Ethereum DeFi ecosystem.

What Is Lido?

Lido is a liquid staking platform that allows users to stake assets like ETH, Solana (SOL), and Polygon (MATIC) and have access to funds simultaneously. You receive stETH for staking ETH, and stETH is a liquid staking token (LST) representing staked ETH’s value 1:1.

It provides staking rewards for the users without forgoing liquidity, so they may utilize staked tokens on every DeFi protocol.

Key Features of Lido

1. Liquid Staking on Ethereum

Users receive stETH after depositing ETH into Lido smart contracts.
stETH accrues staking rewards daily.
One can use stETH on various DeFi protocols such as Aave, MakerDAO, Curve, and Balancer for borrowing and lending, and yield farming.

2. No Minimum Requirement

While Ethereum staking natively demands 32 ETH, Lido allows staking of any denomination and so appeals to retail investors.

3. DeFi Integration

stETH is widely accepted in the DeFi ecosystem:

Used as collateral in lending protocols.
Integrated into yield farming strategies.
Accepted in trading pairs on decentralized exchanges.

stETH: The Core of Lido’s Ecosystem

stETH is the liquid staking token representing staked ETH on Lido. It functions like any ERC-20 token and allows users to:

Trade on secondary markets.
Use as collateral in DeFi.
Earn staking rewards while maintaining liquidity.

With the latest collaboration by Mellow Finance and Symbiotic, Lido now offers stETH holders restaking options using DeFi vaults. The vaults access additional yield layers, as well as potential airdrop rewards.

Benefits of Restaking with stETH:

Double-dip yield strategies via vaults.
Earning Liquid Restaking Tokens (LRT).
Potential airdrops from Mellow and Symbiotic.
Enhanced DeFi participation without unstaking.

How Lido Works

Lido simplifies staking through the following process:

Users deposit ETH (or other PoS assets) into Lido.
The protocol stakes assets through a network of professional node operators.
Users receive stAssets like stETH in return.
These stAssets can be used across DeFi for additional yield opportunities.

These Lido smart contracts handle validator choice, fee computation, and token minting/burning. The system operates such that it minimizes complexity and capital efficiency.

LDO Token: Utility and Governance

Token Details:

Token Name: Lido DAO
Ticker: LDO
Type: ERC-20
Total Supply: 1,000,000,000 LDO
Circulating Supply: ~890 million LDO

Token Allocation:

DAO Treasury: 36.3%
Early Investors: 22%
Core Contributors: 15%
Validators & Signatories: 6.5%
Initial Developers: 20%

Use Cases:

Governance: LDO holders vote on protocol parameters, validator selections, fee adjustments, and development roadmaps.
DAO Treasury: Accumulates protocol fees and reinvests in ecosystem growth and research.

LDO is available on major exchanges like Binance, Bybit, OKX, KuCoin, and others.

Lido in 2024: Recent Developments

TVL Milestone: As of early 2024, Lido reached over $21.7 billion in TVL, maintaining its lead in Ethereum staking.
stSOL Decline: staked Solana assets on Lido dropped by over 68% in recent months, reflecting changing network dynamics.
Restaking Integrations: Collaborations with Mellow and Symbiotic position Lido at the forefront of the emerging restaking narrative.
New Blockchain Proposal: The Lido DAO is exploring a dedicated L1do Blockchain to improve protocol efficiency and governance. This is still under community discussion.

Validator Network and Governance Structure

Lido’s validator set includes major staking firms and DeFi-native funds like:

StakeFish
Chorus One
P2P.org
Staking Facilities
Semantic VC
ParaFi Capital

Well-known individuals in the Ethereum community, such as Stani Kulechov (Aave) and Kain Warwick (Synthetix), have also backed Lido.

Conclusion

Not only the biggest liquid staking protocol but also an Ethereum base layer of the current DeFi stack, Lido offers retail and institutional users access to staked ETH as a usable asset, allowing for flexibility, yield, and new financial plays.

As increases in staking adoption and wider use of restaking continue, Lido is well-positioned to more than double its portion of the market and diversify its products. In case you need passive income and stay liquid, Lido is still the best choice among Ethereum options.