What’s Happening with Lido?
On May 15, Lido liquid staking protocol made headlines by enabling Ether withdrawals for the first time ever! Can you hear that? That’s the sound of stETH (Lido Staked Ether) enthusiasts’ hearts racing. Lido managed to redeem over 260 stETH for its underlying ETH, amounting to about $500,000 within the first three hours of withdrawals!
The Rise of stETH Withdrawals
According to data from Parsec Finance, withdrawals were booming right out of the gate! In the first hour alone, stakers redeemed approximately 4 ETH (worth about $7,308), and things only escalated from there, with later hours showing staggering redemption rates of about 227 ETH (approximately $414,956). Talk about liquidity!
The Mechanics of Liquid Staking
Lido’s liquid staking derivatives (LSD) protocol allows users to stake their ETH with validators and earn additional ETH rewards. When you stake ETH with Lido, you receive stETH in return. The beauty of this system lies in the fact that as you earn rewards, your stETH balance increases. It’s like planting a money tree that actually provides fruit (or in this case, ETH)!
The Road to Withdrawals: A Slight Delay
Before the much-anticipated April 13 Shapella upgrade, validators were left high and dry… or rather, high and staked! Withdrawals weren’t allowed from the staking contracts. Even post-Shapella, Lido users faced a slight hiccup as the withdrawal feature wasn’t implemented until the DAO’s vote on May 15 approved the upgrade to version two. Good things come to those who wait, huh?
What’s Next for Liquid Staking?
Liquid staking has seen a renaissance since the upgrade, soaring to the top of the decentralized finance charts by surpassing the mighty decentralized exchanges in total value locked (according to DefiLlama). Yet, amidst this growth, some legal clouds loom, as the SEC has raised eyebrows concerning the classification of staking providers as securities issuers. Will regulations rain on Lido’s parade? Only time will tell!
