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Lido Dominates Liquid Staking

Aug 18, 2021 · 10 min read

By Paul Burlage, and Duncan Reucassel

Ethereum continues on its path to becoming fully PoS as it transitions to ETH2. If you intend to hold ETH for the long-term, you’ve likely had to decide whether or not to stake your ETH and help validate the network. While the staking yield prevents you from being diluted, since you would be earning a slice of new ETH emissions, there are a few caveats at the moment. The first is the technical hassle that comes with personally staking while the other is related to liquidity. Simply put, ETH2 staking is one directional at the moment. You can deposit / stake your ETH, but you can’t withdraw it yet. This lock up can be a major detractor for people and understandably so. Not only do they forgo the liquidity, but they also lose out on the utility of that ETH in the mean time. Want to borrow against your ETH to generate DAI? That would be tough to do if said ETH is locked up in staking.

Lido Finance, a liquid staking derivative platform, offers a solution. It gives part

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