Lido Review – Liquid Staking
Pros
Positive aspects of the game- Staking services
- Liquid Staking
- Support multiple blockchains
Cons
The disadvantages we highlight- No promotions
- Lido Staking products
- How to stake at Lido?
- Lido Staking Risks
- Smart contracts security:
- Technical risk- ETH 2.0
- ETH 2.0 – Adoption risk
- Key management risk in the DAO
- Slashing risk
- stETH price risk
- Lido video tutorial
- Lido fees
- Lido Finance Alternatives
- Conclusion
Lido Finance is a protocol of Liquid Self-Staking that enables its users to stake their digital currencies in a non-custodial manner on a PoS (Proof of Stake) blockchain network while maintaining liquidity. Every time you deposit Avalanche, Terra, Polygon, Kusama, ETH, Solana, and many more to follow on Lido Finance, It is transferred to Staking Contracts of Lido. Your payments are pooled and distributed to node operators by using these staking contracts. Please keep in mind that node operators do not have control of your cash, and the network is built to operate in a non-custodial environment.
Furthermore, if you stake your cryptos on Lido, you will receive a 1:1 derivative token. For instance, When you stake your Ether (ETH) tokens, you will receive an equal amount of Staked ETH (stETH) tokens, which act as a receipt for your ETH tokens getting staked on the system, also referred to as liquid staking.
Liquid staking gives you a two-in-one deal: you get paid for your staked assets, and also you can profit from fresh investing/trading opportunities. When you deposit tokens, you will receive tradable tokens in exchange.
Lido Staking products
Lido offers a variety of products for staking which are as follows
Ethereum Staking
You may earn daily rewards by staking ETH on Lido. DeFi allows you to stake any money and boost your balance on this system. The current reward value for total ethereum staked is 58,238 ETH with a 4.0% APR.
If you decide to stake your ETH on this platform, You'll need to have an Ethereum wallet, like any WalletConnect-enabled wallet that supports ERC20 and ETH tokens, or MetaMask. After you've set up your wallet safely, you'll need to link it to the Lido exchange.
- To initiate the process, go to the stake.lido.fi and click “Connect Wallet.”
- Choose your favorite wallet. It will show your ETH balance status in the Lido widget once it is linked.
- After that, you must input the number of ETH you wish to stake. It's worth noting that it could also be less than 32 ETH.
- next, Click the “Stake” option. Before confirming your transaction, you will be able to see your stETH balance, the cost for a transaction, and APR (annual percentage rate).
- Finally, verify the transaction in your wallet, and now you must be capable of seeing the ETH amount you've staked in stETH within your wallet. Your staking rewards will be shown in your stETH balance, which will be updated daily.
Polygon Staking
Lido for Polygon is an industry-leading liquid staking solution for MATIC. You can earn MATIC staking incentives without having to manage infrastructure, and they can also trade staked positions and engage in on-chain DeFi (decentralized finance) with their staked commodities by using Lido. Lido for Polygon offers you:
- Their MATIC tokens can be staked in a secure and decentralized manner
- On the secondary market, use their stMATIC.
you can earn stMATIC tokens right after you submit MATIC when you stake with Lido for Polygon. The current ratio of stMATIC/MATIC will be calculated by Lido, and the appropriate amount will be sent to you. MATIC tokens are then distributed across Polygon validators which is a part of Lido for Polygon.
The current reward value of lido for a polygon is 13,039MATIC with an APR of 8.7%.
Terra Staking
The bLUNA token, which is a staking derivative of the native LUNA token of Terra, is used for liquid staking on Terra. Terra stakers can get regular staking incentives while maintaining full control and transferability of their LUNA tokens with the bLUNA derivative tokens. The current reward value of lido for terra staking is 1,848,824 LUNA with an APY of 7.0%.
Staking Terra (LUNA) is similar to the technique described above; however, you'll require a Terra-compatible wallet, such as Math Wallet, Trust Wallet, or Terra Station.
Here's what you should do:
- To initiate the process, go to the stake.lido.fi and click “Connect Wallet.” Choose your favorite wallet. It will show your LUNA balance status in the Lido widget once it is linked.
- Then, input the quantity of LUNA you would like to stake, remembering that any number will suffice.
- Select “Stake” from the drop-down menu. You'll be capable to see your service charge, bLuna tokens indicating their stLuna* tokens or staked Luna on a 1:1 ratio, indicating their staked Luna share. Balances in bLuna and stLuna can be utilized to lend rewards and earn yields. as well as the APR (annual percentage rate) before verifying it,
- Finally, verify the transaction in your wallet, On your wallet, you should then be able to view the LUNA amount you staked in stLUNA. Your staking rewards will be displayed on your stLUNA balance, which will be updated daily.
*stLuna is a Lido token that symbolizes staked Luna, merging the value of the staking rewards and initial investment. stLuna tokens are created when they are deposited and then burned when they are redeemed. The user's part of the whole staked Luna is represented by stLuna tokens.
Solana Staking
Solana is among the world's fastest blockchains, with up to 50,000 transactions per second and low transaction fees. Solana's liquid staking is built around Lido's stSOL token, which is a liquid token variant identical to stETH that enables its users to receive staking rewards without having to maintain their personal validator infrastructure.
stSOL may also be incorporated into the Solana DeFi platforms to enable additional use cases for DeFi (e.g. increased yield, collateral in borrowing procedures, etc.) while retaining staker rewards. The current reward value of lido for Solana staking is 45,105 SOL with an APR of 6.0%.
An SOL token holder links their wallet ( Ledger, Sollet, Phantom, Solflare, Solong) to the Lido program and deposits their tokens. They are given stSOL tokens, which represent a percentage of the entire pool, and the Lido program distributes SOL to validators of lido on the Solana system. The overall SOL under control grows as these delegations earn rewards on the allowed stake, adding value to the stSOL tokens.
stSOL is a liquid token that reflects your percentage of the overall SOL pool that Lido has deposited. You get the newly generated stSOL right after you delegate to the pool. The worth of your stSOL increases over time when your SOL delegation earns incentives. Surprisingly, there is no waiting period for stSOL tokens. When a person delegates their SOL tokens, they are not required to conduct or wait for any activation or delegation processes, as is the case with traditional staking. In the open market, the user can trade stSOL for SOL at any moment.
Kusama Staking
Lido for Kusama or Moonriver which is a Solidity Smart Contracts on Kusama is a market-leading liquid staking system for KSM.
you can get KSM staking incentives without even having to maintain infrastructure, and you can also trade staked assets and engage in on-chain decentralized finance with your staked assets by using Lido. With an APR of 22.1 percent, the current reward value of lido for Kusama staking is 232 KSM.
Moonriver Lido gives you:
- Liquidity via tokenization – no activation lags as well as the ability to utilize or sell your staked tokens as collateral in decentralized finance
- Staking with a single click – no difficult steps;
- Decentralized Security- Your Assets are distributed throughout the industry's premier validators, as decided by the Lido DAO.
Kusama's native token is KSM. Moonriver para chain users cannot utilize KSM because it is not an ERC20 token. xcKSM is used to get around this problem. On the Moonriver network, xcKSM is an ERC20 compliant token that users can receive in exchange for KSM. Using the Transfer tab, a KSM holder secures their KSM on Kusama and receives an equal amount of xcKSM token on their Moonriver account.
How to stake at Lido?
- Choose the network ( Terra, Solana, Ethereum, Kusama, Polygon) in the Lido and then tap the ‘Connect Wallet' button in the top-right area of the screen.
- You'll be forwarded to some wallet options, where you'll have to select one. Because you've linked your wallet to Lido, now you can see your bitcoin balance in the Lido widget.
- Press Stake after entering the amount of cryptocurrency you want to stake. Before you confirm it, keep in mind that you'll now be able to see your stETH (ETH), stLuna(LUNA), stSolana(SOL), and xcKSM (KSM) balances, as well as the Annual Percentage Rate and Transaction Fee. Now go to your wallet and confirm your transaction.
- Finally, you'll see the amount of cryptocurrency you invested in wrapped tokens. As your wrapped tokens balance gets updated every day, you would be enabled to see your staking rewards reflected.
Lido Staking Risks
When staking ETH with liquid staking methods, there are a lot of possible dangers.
Smart contracts security:
Lido comes with the danger of containing a smart contract flaw or bug. To reduce this risk, the Lido codebase is open-sourced, verified, and covered by a large bug bounty program.
Technical risk- ETH 2.0
Lido is based on experimental technology that is still being developed, thus there is no assurance that ETH 2.0 is bug-free. Any vulnerabilities in ETH 2.0 bring with them a danger of slashing along with fluctuation risk.
ETH 2.0 – Adoption risk
The staking rewards linked with an Ethereum beacon chain drive the value of stETH. Significant changes in the value of stETH and ETH could occur if ETH 2.0 fails to attain the needed adoption levels.
Key management risk in the DAO
To reduce custody risk, ether staked through the Lido DAO is spread across numerous accounts and protected using a multi-signature threshold method. Funds could be frozen if signatories above a particular threshold lose their essential shares, get hijacked, or go rogue.
Slashing risk
Validators for ETH 2.0 face staking penalties, having up to 100percent of staked funds at risk if they fail to verify transactions. To control the risks, Lido invests in a number of experienced and trustworthy node operators with a variety of setups, with additional protection provided by Lido fees in the form of cover.
stETH price risk
Due to withdrawal limits on Lido, customers risk an exchange price for stETH that is lesser than any of its inherent value, making arbitrage as well as risk-free market-making difficult.
The Lido DAO is dedicated to reducing and eliminating the dangers listed above to the greatest extent possible. Regardless of this, These risks may still exist.
Lido video tutorial
Lido fees
A 10% fee is applied on staking rewards of the user by Lido. Node operators, a coverage fund, and the DAO are all charged a fee. In the future, the fees may change.
Lido Finance Alternatives
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Conclusion
Lido does everything right, as it provides better staking services for various cryptocurrencies through a simple user interface, charges competitive fees, pays large referral benefits, provides liquidity to many cryptocurrencies, and is backed by industry giants. Although there are risks associated with staking, it is still aiming to make it risk-free for all users.
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