When you stake your cryptocurrency, it’s typically locked up until you unstake and you can’t do anything with it. This restricts your ability to use it with other decentralised finance (DeFi) protocols.
Lido provides liquid staking services for Ethereum and other proof of stake (PoS) blockchains, allowing users to stake crypto and earn rewards while still using their coins for other activities in decentralised finance (DeFi) applications.
It works by creating what is essentially a synthetic replica of a token (known as ‘stAsset tokens’) at a one-to-one ratio. The real version remains staked, your version stays in play.
TLDR; the Lido protocol provides liquidity and accessibility to staked crypto while enabling you to keep using it.
Example
Take Ethereum as an example. By integrating with Lido, users can stake their Ethereum and receive stETH, a tokenised representation of staked Ethereum, in return.
These stETH tokens are the same value as the staked Ethereum. They can then be used across the DeFi ecosystem while still earning staked rewards.
Lido’s governance
Lido operates on a DAO, or Decentralised Autonomous Organisation. This is a type of organisation that operates entirely through smart contracts on a blockchain network, such as Ethereum. Unlike traditional organisations with a centralised structure, a DAO is decentralised and autonomous, meaning it doesn't rely on a central authority or management. Instead, decisions are made collectively by its members through a consensus mechanism encoded in its smart contracts. DAOs aim to offer a transparent and democratic approach to governance, enabling participants from anywhere in the world to collaborate and contribute to the organisation's objectives without the need for intermediaries.
Lido’s governance is facilitated through its native cryptocurrency, LDO. Holders of LDO can vote on proposals related to protocol, upgrades, fee adjustments and other significant decisions affecting the ecosystem. These proposals are typically submitted by community members, developers or other stakeholders and are subject to a voting process where LDO holders can express their opinions.
In addition to governance decisions, the Lido DAO also oversees the selection and management of node operators responsible for validating transactions and securing the supported networks. These node operators are chosen based on their reliability, technical capabilities and commitment to the network’s integrity.
Tip
Keen to explore Lido a bit more? You can learn about LDO basics and get all the latest cryptocurrency news on Luno Discover.
Want to know how to buy, sell, send, or receive LDO? We’ve got answers in the following help articles:
This information is not intended to be nor does it constitute financial, tax, legal, investment or other advice; nor is it a call to trade. The information is intended as general market commentary for information purposes only. Before making any decision or taking any action regarding your finances, you should consult a qualified Financial Advisor.