DeFi
Lido
A liquid staking protocol allowing users to stake ETH and receive stETH tokens while continuing to use their capital.
What is Lido?
Lido is the largest liquid staking protocol. It solves the problem that Ethereum staking requires 32 ETH and locks it for weeks.
How does Lido work?
Lido operates as:
- User deposits ETH.
- Lido mints stETH 1:1 with ETH.
- Lido manages validators using pooled funds.
- Staking rewards accrue to stETH holders.
- stETH can be traded or used in DeFi.
- User can exit anytime by selling stETH. This solves the illiquidity of regular stakingusers don't need to wait for Ethereum withdrawals.
Why does Lido matter?
Lido shows how DeFi can improve on base layer protocols. Regular staking requires 32 ETH and patience.
Key features of Lido
- Solves staking illiquidity
- Any amount of ETH accepted
- stETH tradeable and usable in DeFi
- Largest liquid staking protocol
- LDO governance token
- Centralization risk from dominance
Examples of Lido
Deposit 1 ETH, receive 1 stETH earning ~3% APY. Use stETH as collateral in Aave.
Trade stETH/ETH on Uniswap.