Before trading any crypto assets it is important to understand the risks. This overview summarizes certain risks associated with LDO.
No securities regulatory authority has expressed an opinion about LDO, including an opinion that LDO itself is not a security and/or derivative.
Token Description & Project Background
Lido was launched in 2020 and serves as a liquid staking solution for proof-of-stake networks. It actively supports post-Ethereum Merge consensus layer staking, along with other layer-1 PoS blockchains like Polygon, Kusama, Solana, and Polkadot. The founder of Lido are Konstantin Lomashuk, Vasiliy Shapovalov, and Jordan Fish.
Currently, Lido operates as a decentralized autonomous organization (DAO), where the governance of the protocol parameters and node operators is entrusted to LDO token holders. Notable members of the DAO include Semantic VC, ParaFi Capital, Libertus Capital, Bitscale Capital, StakeFish, Chorus, P2P Capital, KR1, and various other angel investors.
PoS mechanisms face a significant challenge: participants who secure and validate the network need to lock up their tokens, preventing them from earning rewards from other decentralized finance (DeFi) protocols. Additionally, operating a node or running a validator involves high costs. To address these issues, Lido offers a liquid staking solution.
By utilizing the Lido protocol, users can stake their tokens and receive tokenized receipts called ‘stAssets”. For instance, if a user deposits 1 ETH, they would receive staking rewards and also obtain 1 “stETH”, which can be utilized to participate in various DeFi protocols.
Risks of LDO
Like an investment in other crypto assets, there are some general risks to investing in LDO. These include: (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to thestatement.
In addition to these general risks, an investment in LDO is subject to the following specific risks:
- While Lido DAO smart contracts have been reviewed by leading third party auditers, there are always risks bugs and hacks associated with decentralized smart contract platforms. In addition, the protocol remains DAO managed and the direction and future success relies on the collective decisions of the LDO community.
We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with LDO. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.
The LDO community and the Lido DAO are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of LDO have no recourse to Lido DAO, or Uphold if LDO declines in value for any reason.
Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.
Uphold’s Evaluation Process
Prior to listing LDO on the Uphold Platform, Uphold performed due diligence on LDO and determined that LDO is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following:
- The creation, governance, usage, and design of LDO, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community.
- The supply, demand, maturity, utility, and liquidity of LDO.
- Any marketing materials put forward by the LDO social team including, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
- Material technical risks associated with LDO, including any code defects, security breaches and other threats concerning LDO and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
- Legal and regulatory risks associated with LDO, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of LDO.
Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
Uphold users should read thestatement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.
Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following. Please also review the for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website and statement.
Last updated on June 21, 2023.
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