Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
What is Lido staking?
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.
How to stake Ethereum (ETH) on Lido
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.
- First, visit stake.lido.fi and select "Connect Wallet" to begin the process.
- Select your wallet of choice. Once it's connected, it will display your ETH balance in the Lido widget.
- Next, you will need to enter the amount of ETH you want to stake. Keep in mind that it can be less than 32 ETH.
- Next, select the "Stake" option. You will now be able to view your transaction fee, stETH balance and annual percentage rate (APR) before confirming it.
- Finally, confirm the transaction in your wallet and you should now be able to see the amount of ETH that you have staked in stETH on your wallet. The stETH balance will be updated on a daily basis and show your staking rewards.
How to stake Terra (LUNA) on Lido
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:
- First, visit stake.lido.fi and select "Connect Wallet" to begin the process.When you are shown the wallet options, you need to select your preferred wallet. Once it's connected, you will be able to see your LUNA balance in the Lido widget.
- Next, enter the amount of LUNA you want to stake and keep in mind that any number will do.
- Now, select the "Stake" option. You'll be able to view your transaction fee, bLUNA balance and annual percentage rate (APR) before confirming it.
- Finally, confirm the transaction in your wallet. You should now be able to see the amount of LUNA that you have staked in bLUNA on your wallet. The bLUNA balance will be updated on a daily basis and show your staking rewards.
How to stake Solana (SOL) on Lido
To stake Solana (SOL), you will need to have some SOL in a compatible web3 wallet like Phantom or via a Ledger.
- First, visit stake.lido.fi and select "Connect Wallet" to begin.
Then follow the on-screen instructions
- Enter the amount of SOL you want to stake.
- Review the details, including fees and rewards.
- Press "Submit" and approve the transaction in your wallet. You will receive stSOL in return for your staked Solana.
What can you do with stETH?
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 stETH
What does the LDO token do?
The LDO token
governs all Lido DAO governance as well as network decisions to ensure the stability as well as the decentralisation of the network to facilitate growth in a fair, transparent and trustless way.
Where to buy Lido (LDO) tokens
Risks of using Lido
Ethereum 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.
Our Verdict: Should you use Lido?
- Smoother staking experience for users
- A high level of trust
- Bypasses the 32 ETH requirement
- Allows you to withdraw ETH at any time from the pools
- Has risks associated with any nascent technology of this kind
- Ethereum 2.0 might not live up to its roadmap
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.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.