Lido is a project that provides liquid staking solutions for a variety of blockchain platforms, although it is primarily focused on Ethereum.
In Proof-of-Stake cryptocurrencies, users can temporarily “stake” their coins to contribute to the security of the network and earn staking rewards in return. However, the staked coins cannot be used for any other purpose while they’re being staked.
Liquid staking protocols this issue by giving users access to liquidity even while their coins are being staked. This makes it possible to earn staking rewards while effectively also using the funds elsewhere, for example to earn yield in DeFi protocols. Lido accomplishes this by issuing “stTokens”, which represent staked coins. For example, someone staking ETH through Lido would receive an equivalent amount of stETH in return.
The Lido protocol is governed through a decentralized autonomous organization (DAO), which uses the Lido DAO Token (LDO). LDO token holders can vote on key decisions and parameters through the Lido DAO.
Here’s a quick summary of some of Lido’s most important features:
- Liquid staking solution for multiple blockchain platforms
- Lido users can stake their coins and simultaneously stay liquid thanks to stTokens
- LDO is used to govern the Lido protocol through the Lido DAO
- LDO functions as an ERC-20 standard token on the Ethereum blockchain
What is Lido and how does it work?
As we’ve already mentioned, Lido allows users to retain liquidity even while their coins are being staked. After the coins are staked, they are represented with stTokens, which are redeemable for the staked coins and accrue staking rewards over time. Liquid staking is useful for those that want to stake their coins, but also want to deploy them in other opportunities in the crypto market as well.
In the case of Ethereum, Lido also lowers the barrier to entry for staking. Solo staking on Ethereum requires 32 ETH, which is more than the average cryptocurrency investor can afford to invest. Through Lido, users can stake smaller amounts as the protocol pools together smaller deposits to launch validators.
The balances of stTokens change on a daily basis through a mechanism called the “rebase” to reflect the staking rewards (and potentially also penalties). stTokens can be redeemed for the underlying tokens at a ratio of 1:1. This will also be possible for stETH, once Ethereum transitions to Proof-of-Stake and an upgrade is introduced to allow coins to be unstaked. In the meantime, users can trade stETH for ETH on decentralized exchanges and other trading venues.
Here are the different Proof-of-Stake cryptocurrencies supported by Lido at the time of writing:
Meanwhile, Lido’s crypto asset LDO is used to facilitate the protocol’s governance process. Through the Lido DAO, LDO holders can vote on the protocol’s fee structure, node operators, oracle service providers, and other key decisions related to the protocol.
Lido price history
Lido has emerged as the leading liquid staking service for the Ethereum ecosystem, which has helped the LDO crypto reach a significant valuation. In fact, LDO is currently one of the most valuable governance tokens on the market. On CoinCodex, you can view the up-to-date LDO price chart as well as the complete Lido crypto price history.
LDO was originally launched in December 2020. Lido’s cryptocurrency has seen quite a bit of price volatility during its time on the market. Let’s take a look at some of the most important historical milestones for the LDO price:
- $2 - The price of LDO reached $2 for the first time ever in February 2021
- $3 - The LDO price first exceeded $3 in May 2021
- $4 - The price of LDO first reached $4 in May 2021
- $5 - LDO value hit $5 for the first time in May 2021
- $6 - LDO token price reached $6 for the first time in August 2021
The Lido market cap has of course also seen big fluctuations as the market went through its cycles. The token’s market cap is also impacted on LDO’s token release schedule, as the Lido DAO can vote to release tokens from its treasury to fund projects that are deemed valuable for the Lido ecosystem.
Lido supply
The launch of the Lido DAO was accompanied by the minting of 1 billion LDO tokens, which is the LDO max supply. However, the circulating supply of LDO is smaller, as a portion of the tokens was locked for one year, and was then subject to a one year vesting period. Here is the planned allocation for the LDO token supply:
- DAO Treasury: 36.32%
- Investors: 22.18%
- Validators and signature holders: 6.5%
- Initial Lido developers: 20%
- Founders and future employees: 15%
The circulating supply of LDO will grow over time as a larger number of vested tokens is released onto the market.
The most important Lido milestones
While Lido is a relatively new project, it has still reached some notable milestones and has become a leading platform for Liquid staking. Let’s go through some of the most important developments in Lido’s history:
- December 2020: Lido launches shortly after Ethereum’s Beacon Chain goes live
- April 2021: The project launches the Lido Ecosystem Grants Organization (LEGO)
- November 2021: Lido introduces support for liquid staking on Solana
- March 2022: Lido begins supporting liquid staking on Polygon
- April 2022: Lido’s Total Value Locked (TVL) surpasses $20 billion
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