Last month, Lido’s Staked Ethereum was the subject of much controversy. It’s now stabilizing, leading to a rapid rise in its native token. Lido’s native token LDO, which has risen by more than 24% over the past 24 hours, hit a weekly high of $0.66c.
Meanwhile, Lido’s Staked Ethereum token called stETH seems to have increased in value with Ethereum. Both traded at $1,091 while the Ethereum version traded at $1,127.
However, the current gap between Ethereum & stETH still represents a discrepancy around 3% for Lido’s staked token.
This is significant, but stETH was 6% off the mark at the peak of its de-peg last week, according to a Report by Nansen, a blockchain analytics company.
Lido’s LDO token, which is rapidly growing, is used for protocol governance. Holders can help manage token distribution and fees, approve and remove Lido operators, and vote on governance proposals within the Lido AAO.
Anybody can become an Ethereum 2.0 Validator provided that they have 32 Ethereum to unlock to activate the software. They will also earn rewards for processing transactions, storing data and adding blocks to Ethereum.
Lido is an alternative for those who don’t have the funds.
Lido allows users to stake any amount of their Ethereum through smart contract-automated financial contracts. Users can earn stETH yields, but they cannot currently be redeemed 1:1 for Ethereum. However, after the merger it will be. It can be borrowed, staked, and traded for other tokens.
Staked Ethereum is issued by Lido to represent Ethereum that has been locked up in Ethereum’s Beacon Chain-a network that in August will be merged with Ethereum’s mainnet in an upgrade that will transition the entire network to a proof-of-stake consensus mechanism and, reportedly, render the network 99.95% more energy-efficient.
Last month, Lido was the subject of controversy after Celsius, a crypto lender, stopped withdrawals in an attempt to prevent a bank run that could further reduce the price of stETH. Nansen revealed that Celsius had staked customer funds in Lido. According to Nansen, Celsius currently has at least $449,000,000 worth of stETH stored in a private wallet.
Lido is currently the fourth largest DeFi Protocol with a total value locked of $4.79 Billion. It also holds the largest share of the Beacon Chain’s depositors ( 31.6%).
99.8% Lido’s DAO voted for the protocol’s Ethereum stake capacity to remain uncapped despite centralization concerns.
Lido’s views are not popular with many including Ethereum’s founder VitalikButerin, Beacon Chain community manager Superphiz and Ethereum Foundation researcher Danny Ryan who all publicly tweeted that centralization would be possible if Lido had staking control.
Lido responded that staking was not against the ethos of Ethereum. It stated that it was created “to stop centralized exchanges gaining the lion’s share of staked Ethereum” as well as “to keep Ethereum centrally managed.”