Staking Protocol Lido Expands to Ethereum Layer 2

Key Takeaways

  • The Lido improvement group has introduced plans to increase the protocol throughout varied Ethereum Layer 2 scaling options.
  • It should initially intention make a wrapped, non-rebasing model of stETH accessible throughout the DeFi ecosystems of each Optimistic Rollups and ZK-Rollups.
  • With greater than 31% of all staked ETH processed via Lido, the protocol is a serious drive behind the securing of the Ethereum community.

Lido has confirmed it is going to initially launch the providing on Optimism and Arbitrum. 

Securing Ethereum on Layer 2

Lido is increasing to Layer 2.

A Monday weblog submit from the staking protocol’s improvement group has revealed that Lido will increase to a number of of Ethereum’s Layer 2 options. With the replace, a wrapped model of Lido’s ETH staking token, dubbed wstETH, will quickly be accessible on Layer 2 DeFi. 

Lido is a staking service supplier for Ethereum and different blockchains. It lets customers stake their ETH to acquire stETH, a token representing their stake, permitting them to place that to work in different protocols. Lido is the main participant within the so-called “liquid staking” house, and it’s soared in reputation over the previous 12 months as its product lets stakers earn yield from each staking and DeFi on the identical time. stETH commonly rebases to replicate the rising quantity of ETH it represents.

Within the weblog submit, the Lido group mentioned that the undertaking was “network-agnostic” and had plans to increase to a number of Layer 2 options which have “demonstrated financial exercise.” The submit confirmed that it might first launch on the Optimistic Rollup options Optimism and Arbitrum. It has additionally built-in the ZK-Rollup initiatives Aztec and zkSync through Argent.

The enlargement will likely be made doable via a wrapped, non-rebasing model of stETH referred to as wstETH. This can initially be the one token supported, although the protocol mentioned it plans to combine the rebasing stETH sooner or later. In line with the group, the aim is to allow customers to take part in securing Ethereum at a low price from their Layer 2 of selection. 

Lido’s place inside the Ethereum ecosystem has been the topic of debate in latest months as greater than 31% of the entire provide of staked ETH is processed via the protocol, resulting in considerations that Lido is inadvertently making Ethereum extra centralized. The DAO just lately rejected a proposal to restrict Lido’s potential market share of staked ETH; it’s, nonetheless, discussing the implementation of a novel governance construction that may additional decentralize its decision-making course of.

Disclosure: On the time of scripting this function, the writer owned ETH and a number of other different cryptocurrencies. 

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