30s Summary

Staking protocol Lido is ending its operations on the Polygon network due to reduced usage, industry changes, and its increased focus on Ethereum. Challenges with the Polygon network, including maintenance, low rewards, and a changing decentralized finance (DeFi) landscape contributed to Lido’s decision. The introduction of zero-knowledge Ethereum Virtual Machine (zkEVM) solutions lowered the need for ‘liquid staking’ on Polygon’s Proof-of-Stake (PoS) system, further affecting Lido’s potential. Following the closure, withdrawals will be paused for a week in January, and front-end support will be halted by mid-2025. This comes after Lido halted operations on Solana’s blockchain last year due to financial concerns.

Full Article

Lido, a staking protocol, has decided to wind up its operations on the Polygon network. This decision was due to fewer folks using it, shifts within the industry, and a strategic shift to focus more on Ethereum. This news came to light after fans of the Lido DAO Token (LDO) requested for it, some forum chats, and a vote by the community where almost everyone was on board with the idea.

Two ideas were thrown around for discussion during a vote in November. One was about making a move away from Polygon, and the other was about rethinking the economic model. Lido had its share of challenges on the Polygon network. They had to deal with intensive upkeep, lesser rewards, and a changing decentralized finance (DeFi) landscape that’s now more focused on zkEVM solutions.

This transition meant that there was less need for ‘liquid staking’ solutions (Must be some techie talk) on Polygon’s Proof-of-Stake (PoS) system, affecting Lido’s potential there. It seems as if other alternatives have been developed within an eco-system that turned out smaller than expected.

Shard Labs, the guys who pitched the idea to bring this staking service to Polygon said that the move towards zkEVM led to a drop in demand for Polygon’s PoS and liquid staking system. As of Dec 16, folks were no longer able to stake requests on Lido. Bummer, right? But don’t worry, you can still get back your stakes through Lido’s system till mid-2025. But remember, all rewards have stopped now.

Something else to keep in mind – Lido’s going to pause all withdrawals for a week next year in January. By June 16, the Lido team will stop its front-end support, so you can only handle your withdrawals using your browser.

Just a heads up for you all, Lido Finance has locked in a total of $38 billion value as of Dec. 16, which makes it the largest ‘liquid staking’ protocol in the DeFi market. Around $45 million in stakes are on Polygon currently. Meanwhile, Polygon’s network has over $1.2 billion value locked in.

This isn’t the first time Lido’s stopping operations on a network. Last year, they decided to stop operations on Solana’s blockchain due to worries about finances and fees. Aave, another big name in the lending protocol world on Polygon has also talked about stopping its operations due to concerns around the upcoming review of risk profiles. Marcus Zeller, the founder of Aave chain launched this idea in response to Polygon’s governance request to use over $1 billion in stablecoins to farm on other protocols.