Lido is an Ethereum 2.0 staking pool that solves some of the issues for ETH 2.0 stakers running a validator. These pain points include the 32 ETH minimum stake requirement and the immovability of funds for at least a year.
Ethereum's dapps rely on its network to transfer, lend, borrow and maintain their users' funds by taking advantage of smart contract functionality.
Due to Ethereum 2.0's transition to a proof-of-stake consensus mechanism, you'll need at least 32 ETH to become a full staking validator. Owning less will require you to add your ETH to a collective staking pool.
However, staking pools have a few limitations, such as not being able to move your staked funds and a required minimum when it comes to participation. With ETH's price having seen dramatic increases since late 2020 after the Beacon Chain upgrade heralded in a new ETH 2.0 transition, it has become increasingly hard for the average crypto investor to get their hands on this cryptocurrency.
Lido allows its users to stake their ETH without locking or maintenance requirements, while they remain free to partake in on-chain activities like lending.
Solutions such as Lido allow users to stake any amount of ETH by issuing stETH (which stands for staked ETH), which can be used for lending, collateral and more while allowing the user to earn daily staking rewards.
Since launching on Ethereum, Lido now supports its staking solution on the Terra and Solana blockchains, with plans to roll out to additional blockchains in the future.
Lido is an Ethereum 2.0 staking pool that allows the holders of ETH to pool their funds and earn rewards, even if they have less than 32 ETH or don't want to stake that much.
A decentralised system of node operators manages the deposits, staking rewards as well as withdrawals in accordance with the protocol that is governed through the Lido DAO.
If you want to stake your ETH on Lido, you need an Ethereum wallet, such as MetaMask or any WalletConnect-enabled wallet that supports ETH and ERC20 tokens. Once you've securely set your wallet up, you need to connect it with the Lido exchange.
Staking Terra (LUNA) is quite similar to the process explained above; however, here you will need a wallet that supports Terra, such as Terra Station, Math Wallet or Trust Wallet.
Here is what you need to do:
To stake Solana (SOL), you will need to have some SOL in a compatible web3 wallet like Phantom or via a Ledger.
Then follow the on-screen instructions
You can use stETH to participate in DeFi, collateralise your assets or exchange them with other tokens. You can also earn staking rewards without experiencing any lock-up period, and you can withdraw your staked tokens whenever you want.
The platforms that currently support stETH include Kraken, Coinmama, OKCoin and Binance.
Where to buy and sell stETHEthereum 2.0 has a lot of supporters, but there is always the underlying possibility that the roadmap might fail to be implemented, face further delays or be stopped in its tracks by regulators.
Then there are also the risks of using a smart contract, which means that any decentralised protocol that is built on Ethereum or another smart contract network could potentially be exposed to certain security risks, such as hacks, scams or self-inflicted failures.
DeFi platforms like Lido are especially vulnerable to security threats, as a slew of cases has proven in 2021. Exchanges can shut down, or disappear, in an exit scam or rug pull or be hacked due to a smart contract vulnerability or new threats like flash loan attacks.
This is why there are platforms that offer exit transactions to their users that can be triggered through permissionless means, allowing their users to shut down their validators and remove them under their management.
So… should you Li-do or Li-don't?
It's important to do your own research before wading into a crypto investment and even more so when you deal with DeFi protocols.
If you want to stake Ethereum without needing to meet the 32 ETH requirement on Ethereum 2.0, want to be able to take out your cryptocurrency at any time without having it locked up for a year and can tolerate the associated risks, Lido might be the perfect choice.
Our expert contributors are a key part of Finder’s content. Learn more about the opportunities for experts who work with us.
Compare nine Eastern Loans alternatives to find funding that suits your needs.
Where to find a short-term loan in BC and how to get funded fast.
In a tight spot? These same-day loans can help, but they’re not all the same.
Use our list to compare the best loan apps in Canada.
Learn about the supported transactions, features and fees of the RBC Flex Choice Business Account Package.
With most banks, opening a chequing account online is a straightforward process
We compare EQ Bank and Wealthsimple head to head to see how their banking products and services stack up against one another.
We compare Simplii and CIBC head-to-head to help you work out which is the right bank for you.
Compare products and services from Simplii Financial and KOHO to find out which is best for you.