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About Lido DAO (LDO)
Lido DAO is a decentralized protocol that offers liquidity for staked Proof-of-Stake (PoS) assets, including Ethereum and Solana. The project offers non-custodial staking services that allow users to maintain the liquidity/utility of their staked tokens.
LDO is the network’s native digital asset. It’s a governance token that represents voting rights in the Lido DAO, Messari said.
Lido was designed to address the operational barriers inherent to staking on Ethereum (and other PoS networks) such as the need for a large token balance and dedicated staking infrastructures, as well as the lack of any tokenized liquidity and utility, according to the project’s whitepaper.
Generally, staked tokens are akin to cash stashed in a CD, that is, locked up for a given period of time. While this framework does generate an annual yield for the depositor, it also results in a loss of liquidity and utility in the underlying asset. Lido aims to change this by offering a liquid alternative to the traditional staking process. When yield seekers send ETH, SOL or MATIC, among other assets, to a Lido-backed staking contract, they receive a corresponding amount of stETH (or stSOL, stMATIC) that maintains a 1:1 peg to the underlying asset. As users earn additional staking rewards or encounter slashing penalties, their balance of stETH rises/falls, accordingly.
Compared to its parent asset, stETH maintains much of the utility. According, Lido’s whitepaper “st” tokens can be utilized as collateral for digitized loans via various yield farming platforms for additional tokenized rewards.
While the protocol was originally optimized for Ethereum, Lido DAO has since added integration with Solana, Polygon and Kusama, which is Polkadot’s “canary” network. The Lido platform’s total value locked (TVL) has risen sharply to $8.6 billion, making it, as of mid-May 2022, the second-largest project in the decentralized finance (DeFi) sector.
How is the price of LDO determined?
LDO’s price is partially a function of the token’s deflationary nature. There will only ever be 1 billion LDO, CoinGecko said. Thus far, some 352 million LDO are currently in circulation.
Why does LDO have value?
Given the operational and technical barriers inherent in the process of doing DeFi transactions using Ethereum and other PoS blockchain networks, Lido’s non-custodial, liquidity-enhancing staking services would seem to create a value proposition for those looking to stake their digital assets.
What are the main benefits of LDO?
- Lido, according to the project's website, lets users: stake their assets, any amount, no minimums, for daily rewards; and mint staked tokens which are pegged 1:1 to a users' initial stake and can be used across a wide expanse of DeFi ecosystems for compounding yield.
- Lido DAO allows users to control the liquidity in their staked assets, essentially unshackling them for optimal utility.
- The platform is integrated with some of DeFi’s leading projects including AAVE, Maker DAO and Yearn.Finance.
How to buy Lido DAO (LDO)
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