Lido Finance: An Overview

Lido Finance: An Overview

June 25, 2024

Overview

Lido Finance lets users stake Ethereum for stETH tokens, keeping liquidity for DeFi use. It's managed by node operators, offering LDO for governance. With a TVL of $33.64B and $1.92B market cap, it's popular with 600 daily and 11,000 monthly users. Recently partnered with 1inch for seamless token swaps across networks.

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Intro

Lido Finance is a platform that allows users to stake Ethereum (ETH) and receive stETH tokens in return. These tokens represent the staked ETH and continue to earn staking rewards. Unlike traditional staking methods, Lido's liquid staking allows users to retain liquidity. This means that users can use their stETH tokens in various DeFi protocols. Lido Finance lowers the barrier to entry for staking on Ethereum by eliminating the need to run a validator node or hold the required 32 ETH.

How Does Lido Finance Work?

Lido uses a network of node operators who are responsible for staking the ETH on behalf of users. Users deposit their ETH into Lido's smart contracts, and in return, they receive Staked Ethereum (stETH tokens). These stETH tokens are pegged to the value of ETH, and they also continue to accrue staking rewards. Users can then use their stETH tokens in various DeFi protocols, such as lending platforms or liquidity pools.

Lido Token (LDO) is an ERC-20 Token built on the Ethereum network. LDO gives holders voting rights on the Lido DAO. This grants them influence over important aspects of the protocol's operation, such as the selection and removal of Lido node operators and the management of fees and distribution. 

Lido Finance Stats (As of June 24):

  • Total Value Locked (TVL): ~$33.64 billion

  • Total Circulating Market Cap: ~$1.92 billion

  • Users: ~600 (daily active), ~11,000 (monthly active)

Latest Milestones and News

In February, Lido Finance announced a partnership with 1inch Network to simplify the swapping process for Lido's staked ETH (stETH) and wrapped stETH (wstETH) tokens. This collaboration allows users to efficiently switch between stETH, wstETH, and ETH across Ethereum, Arbitrum, and Optimism networks.

Disclaimer: The information provided in this research paper is for educational and informational purposes only. It does not constitute financial advice, investment guidance, or any solicitation to buy or sell financial instruments. The views expressed herein are those of the authors and do not necessarily reflect the opinions of Kollectiv.

2024