Lido ($LDO)

Lido is a liquid staking protocol that offers a staking solution for Ethereum 2.0. Ethereum is switching to a new validation system called proof-of-stake PoS. PoS systems allow users to stake a certain amount of tokens in order to secure and validate the network in return for rewards.

With Ethereum poised to be the biggest staking economy in the Crypto space. With the Ethereum 2.0 upgrade comes a high market risk related to frozen assets until transfers will be available in Ethereum 2.0 (Phase 1.5 or Phase 2). Lido liquid staking protocol is an Ethereum 2.0 liquid staking protocol that solves this problem. Lido currently holds 25% of ETH 2.0 deposits.

Users can stake their $ETH among other assets like $LUNA, $SOL, $KSM, and $MATIC for their liquid staking 1:1 paired token in the Lido protocol. For example, users can stake their $ETH and receive $stETH tokens. These $stETH tokens can then be used like regular $ETH tokens to earn yields and lending rewards across a number of protocols while your original staked $ETH inside of Lido will earn you daily staking rewards.

Lido solves the problem of illiquidity, immovability, and accessibility by providing users with a liquid staking solution. Lido currently has 16.5B in total staking assets (Mar.22/22) and has paid rewards out totaling 342M.

HOW DOES IT WORK

Liquid staking allows users to earn staking rewards without locking up their assets. Users can deposit staking tokens such as $ETH, $LUNA, $SOL, etc, and receive tradable liquid tokens in return. Traditionally users have to lock up their tokens in order to receive staking rewards and they no longer have access to those staked tokens. Liquid staking changes this and gives users the liquid staking token in return for their assets. This can then be used across a number of DeFi protocols within the ecosystem.

So in this case let's say a user sends in their $ETH to the Lido DAO smart contract. The user will receive $stETH which is the liquid staking token in return at a 1:1 ratio. Meaning you send in 10 $ETH you will receive 10 $stETH. The 10 $stETH that you receive can be used on other protocols in the Ethereum ecosystem such as Curve, AAVE, Anchor, and much more - See a comprehensive list here - https://lido.fi/lido-ecosystem

Meanwhile, the original 10 $ETH that was sent to the Lido DAO wallet (decentralized autonomous organization) is controlled and governed by the DAO.

LIDO DAO

The Lido DAO is responsible for the governing and management of the Lido staking app. It’s also in charge of distributing funds from the Lido Treasury. Lido is largely structured on the design of Ethereum 2.0’s beacon chain so the project/DAO needs to be flexible and adaptable.

Ad DAO structure was decided to be better suited and more beneficial than a small decentralized entity. The DAO structure will allow for decisions and terms surrounding the platform updates are able to be fairly negotiated and decided upon through majority approvals.

Below is an extensive list of what the Lido DAO will be responsible for as outlined in their documents.

ETHEREUM 2.0

Ethereum 2.0 brings about the PoS-based consensus algorithm to Ethereum. With this users can stake and lock up an amount of ether in order to participate in the blockchain consensus in return for rewards.

Ethereum 2.0 will launch in a multi-phase rollout. Staking was launched early however with state transitions including transfers being launched in the late phases of ETH 2.0 it will be impossible to move, trade, or spend $ETH that has been staked. So in simple terms, any $ETH staked in the early rollout with be locked and unmovable for an extended period of time.

This is why Lido’s liquid staking solution $stETH will be so crucial.

stETH ECOSYSTEM

The $stETH that users will receive in return for staking their $ETH will be compatible and fully operational with a number of decentralized finance (DeFi) protocols. There is a large range of possibilities with what you can do with your $stETH. For example, you can borrow against your $stETH with AAVE, you can go to Anchor Protocol and exchange your $stETH for $bETH, you can go to MakerDAO and use your $stETH as collateral for loans.

See the extensive list here of 29 protocols that are operational within the Lido ecosystem - https://lido.fi/lido-ecosystem

TOKENOMICS

$LDO is the native utility token for the Lido DAO protocol. The $LDO token does the following:

Provides DAO governance rights

Governs which parties are Lido node operators

Manages fees & distribution.

$LDO has a maximum supply of 1,000,000,000 tokens with the circulating supply currently being 103,760,882.30 $LDO (as of Mar.22/22). This means that only 10.3% of the maximum supply is circulating.

LDO Token Allocation

DAO Treasury: 36.32%

Investors: 22.18%

Initial Lido Developers: 20%

Founders & Future Employees: 15%

Validators & Signature Holders: 6.5%

LDO Token Sale

The circulating supply of Lido will be:

4,800,000 (Curve 4th emission LPs)

240,000 (LEGO treasury for grants)

500,000 (DeversiFi liquidity markets)

5,000,000 (Curve 3rd emission LPs)

100,000 (ARCx LP rewards)

250,000 (1inch LP rewards)

50,000 (Unslashed Finance insurance)

5,000,000 (Curve 2nd emission LPs)

5,000,000 (Curve 1st emission LPs)

4,000,000 (Airdrop rewards)

TEAM

Lido DAO members include

Semantic VC

ParaFi Capital

Libertus Capital

Terra

Bitscale Capital

StakeFish

StakingFacilities

Chorus

P2P Capital and KR1.

Lido is also joined by a number of key angel investors, including

Stani Kulechov of Aave

Banteg of Yearn

Will Harborne of Deversifi

Julien Bouteloup of Stake Capital

Kain Warwick of Synthetix.