Lido

The journey of Lido Finance began in December 2020, born out of a direct response to a significant challenge within the burgeoning world of decentralized finance (DeFi) and Ethereum's transition to a Proof-of-Stake (PoS) consensus mechanism. In the early days of Ethereum staking, participants faced a critical dilemma: stake their ETH to help secure the network and earn rewards, but in doing so, their assets would be locked up, illiquid, and inaccessible for other DeFi opportunities. This barrier to entry was substantial, not only due to the technical complexities of running a validator node but also the high capital requirement of 32 ETH and the immovability of staked funds. A collective of founders, including Konstantin Lomashuk and Vasiliy Shapovalov, envisioned a solution to democratize staking and unlock the liquidity of staked assets. This vision materialized as Lido, a protocol designed to make staking simple, secure, and, most importantly, liquid.

Lido's core innovation was the introduction of a liquid staking derivative, the stETH token. When a user stakes their ETH with Lido, they receive an equivalent amount of stETH in return. This token represents their staked capital and accrues staking rewards in real-time, but unlike natively staked ETH, it remains fully liquid. Users can trade their stETH, use it as collateral for loans on platforms like Aave, or provide liquidity to decentralized exchanges, all while continuing to earn staking rewards from the underlying ETH. This groundbreaking approach effectively solved the liquidity problem, allowing users to have their cake and eat it too. The protocol is governed by the Lido DAO (Decentralized Autonomous Organization), where holders of the LDO governance token can vote on key decisions, from fee structures to the selection of node operators. This community-led approach aims to ensure that Lido remains a decentralized and resilient public good, continually evolving to support the health and growth of the Ethereum ecosystem and beyond, having expanded its liquid staking solutions to other PoS networks.