Lido

Lido is a liquid staking protocol for Ethereum. Users deposit ETH and receive stETH, a token that represents their staked ETH and the rewards it earns, and that can be traded or used in other applications while the ETH stays staked. Lido allocates deposits to validators run by node operators, charges a 10% fee on staking rewards, and is governed by the Lido DAO through the LDO token. Lido has also offered staking on other networks, all of which it has since wound down.¹²

HistoryReport an error

Founding and launch

Lido was founded by Konstantin Lomashuk and Vasiliy Shapovalov, who had earlier created the staking provider P2P Validator (p2p.org).³⁴ Lomashuk also runs the venture firm cyber.Fund with another Lido co-founder.⁴

Lido was built for the period when ETH staked on the Beacon Chain could not be withdrawn, giving stakers a transferable token representing their locked ETH.²⁵ A testnet ran on Goerli from late November 2020, and in December 2020 Lido raised US$2 million from Semantic Ventures, ParaFi Capital, Terra, KR1, Stakefish, Staking Facilities and others, with angel investments from Rune Christensen, Stani Kulechov and Kain Warwick.² The staking service opened on 19 December 2020, and the stETH contract was deployed that month.⁵⁶

The LDO governance token went live on 5 January 2021 (see Token).⁷ In April 2021 LDO holders approved selling 100 million LDO from the treasury, 10% of supply, to the investment firm Paradigm and partners for 21,600 ETH; Paradigm paid 15,120 ETH for its 70 million in May.⁸⁹³¹⁰ In March 2022 Andreessen Horowitz announced a US$70 million investment, paid partly by buying LDO from existing holders.¹¹

Other networks

By March 2022 Lido offered liquid staking on Solana, Kusama and Terra, and planned to launch on Polygon that month; by June 2022 it also supported Polkadot.¹¹⁵ Lido on Terra ended in May 2022 after Terra's collapse.⁵

The other deployments were later sunset:

• Polkadot and Kusama. In March 2023 MixBytes, which developed both deployments, said it would stop supporting them, citing low adoption and "unmet financial expectations". New deposits stopped on 15 March 2023 and the Polkadot deployment ended on 1 August 2023.³⁹
• Solana. P2P Validator, which had developed Lido on Solana since March 2022, asked the DAO either to fund continued development or to close it. LDO holders voted to close it, and staking stopped on 16 October 2023. Front-end support for unstaking ended in February 2024.⁴⁰
• Polygon. Shard Labs proposed in November 2024 to sunset Lido on Polygon, citing low adoption and weak economics. A Snapshot vote ending on 28 November 2024 approved the sunset, with 58 million LDO in favour. New staking stopped on 16 December 2024, and front-end support ended on 16 June 2025.⁴¹⁴²

Withdrawals and Lido v2

Until Ethereum's Shapella upgrade activated on 12 April 2023, staked ETH could not be withdrawn, and stETH holders who wanted ETH had to sell on the market.¹²¹³ Lido announced v2 in February 2023. It added withdrawals, letting holders redeem stETH for ETH at a 1:1 ratio through a request-and-claim queue. It also added a Staking Router that lets the protocol use several "modules", each with its own operator set and rules.¹⁴ LDO holders approved the upgrade in an Aragon vote that concluded on 15 May 2023, and withdrawal requests opened that day.¹⁵

New operator modules

Under the Staking Router, the DAO added modules meant to widen the operator set beyond the curated list:

• Simple DVT went live on mainnet on 16 April 2024 after an Aragon vote in February. It uses distributed validator technology from Obol and SSV Network, in which several operators jointly run one validator, similar to a multisig. Lido said the module would bring in solo and community stakers alongside professional operators.⁴³
• The Community Staking Module (CSM) launched on mainnet on 25 October 2024 as Lido's first permissionless module. Anyone can run validators by posting an ETH bond, set at 2.4 ETH for a first validator once the module left its early-adoption phase in January 2025. Lido reported that more than 330 operators had joined by then.⁴⁴

In July 2026 an on-chain vote approved a "Lido Core" upgrade that introduced Curated Module v2, Staking Router v3 and CSM v3.¹⁶ After a Snapshot vote, Simple DVT's 72 regular clusters were wound down and their operators offered a route into CSM.¹⁷ In October 2026 a second CSM instance for high-balance (0x02) validators went live.¹⁸

Lido Alliance and Lido v3

In a Snapshot vote closing on 23 May 2024, LDO holders approved the Lido Alliance, a framework proposed by Steakhouse Financial under which the DAO endorses and supports Ethereum-aligned protocols that share its focus on security.¹⁹ By April 2025 the alliance had onboarded three members: Mellow, Drop and Bolt.²⁰

Lido v3 was announced in February 2025 and launched on mainnet on 30 January 2026, after testnets and a soft launch.²¹²² It added stVaults: separate vaults in which an owner chooses node operators, fees and other settings, and can mint stETH against the staked ETH. Launch partners included node operators P2P.org and Chorus One, and the layer 2 network Linea, which used a vault to stake bridged ETH.²¹²²

Recent developments

In August 2025 Lido cut about 15% of contributor roles across Lido Labs, Lido Ecosystem and the Lido Alliance. Shapovalov said the decision "was about costs — not performance".²³ He also said that "Lido failed to ride the wave of restaking", and set out a plan to win institutional stakers.²⁴

In December 2025 LDO holders voted on GOOSE-3, a strategy for 2026 that included expanding Lido Earn, a set of yield vaults, and new revenue sources beyond staking. Some forum members questioned that direction.²⁵ Lido reported that its 2025 revenue fell 23% from 2024, which it attributed to net staking outflows, lower staking yields and competition.²⁶

From November 2025 the DAO debated using treasury funds to buy back LDO, and a second proposal followed in March 2026 after the token reached an all-time low.²⁷ The DAO approved a one-off LDO Accumulation Program on 13 April 2026 and adopted an automated mechanism, NEST, which converts part of any staking revenue above an annualised baseline of US$40 million into LDO.²⁸ Lido's H1 2026 report said NEST buybacks were not expected soon at current ETH prices.¹⁶

Regulation

On 5 August 2025 the US Securities and Exchange Commission's Division of Corporation Finance issued a staff statement saying that, in its view, liquid staking as it described it, including the issue and redemption of staking receipt tokens, does not involve the offer or sale of securities. The statement has no legal force, depends on the facts it assumes, and does not cover providers that decide how much to stake, guarantee rewards, or offer extra yield.²⁹

On 16 October 2025 VanEck filed to register a VanEck Lido Staked Ethereum ETF that would have held stETH.³⁰ It withdrew the filing on 14 October 2026, saying it did not intend to proceed; no shares were ever sold.³¹ A WisdomTree exchange-traded product in Europe that stakes through Lido launched in December 2025.²⁶¹⁶

TechnologyReport an error

stETH and wstETH

When a user deposits ETH, Lido mints stETH one-for-one. stETH is a rebasing token: each day an oracle reports validator balances, and every holder's stETH balance changes to reflect rewards or penalties, without any transfer. Internally, each holder owns a fixed number of "shares" of the pool, and the stETH value of a share changes with each report. If validators are slashed, balances can fall.³²

Because some applications cannot handle balances that change on their own, Lido also issues wstETH, a wrapper whose balance stays fixed while the amount of stETH each token represents increases.³²

Since v2, holders can exit through Lido itself by requesting a withdrawal. The protocol fills the request from incoming deposits or by asking operators to exit validators, then burns the stETH. Lido normally runs in "turbo" mode; a "bunker" mode slows withdrawals in severe conditions so that early leavers do not gain at the expense of those who stay.¹⁴¹⁵

Node operators

Lido does not run validators itself. The DAO's 10% fee on staking rewards is split between node operators and the DAO treasury.¹ The original curated operator set was chosen in onboarding rounds: a sub-governance group of operators reviewed applications and recommended candidates, and the DAO made the final decision.³³ Under Curated Module v2, a Curated Module Committee assigns approved operators to groups that determine how much stake each receives, while the CSM modules remain open to anyone who posts a bond.³⁴

GovernanceReport an error

The Lido DAO is an Aragon organisation in which voting power is proportional to LDO holdings. Proposals are discussed on the Lido research forum, often polled on Snapshot, and enacted by on-chain Aragon votes. Routine, uncontentious actions go through Easy Track, a lighter process meant to reduce voter fatigue and gas costs.³⁵¹⁹

Token

LDO is an ERC-20 token with a fixed supply of 1 billion, all minted at launch. The announced allocation was:⁷

Allocations to insiders were locked for one year and then vested over a second year. A 0.4% airdrop went to early stakers.⁷ LDO gives voting rights but no claim on fees; a DAO forum member described it in 2026 as "merely votes, not dividend-paying shares".²⁷

Dual governance

Dual governance was proposed on the Lido forum in June 2022. The author argued that LDO holders' interests differ from those of stakers, and that a captured DAO could use upgrades to steal funds or control the validator set.³⁶ Under the version deployed in 2025, approved decisions wait in a timelock. stETH holders can oppose them by locking stETH, wstETH or withdrawal requests in an escrow. If the locked amount reaches 1% of Lido's staked ETH, execution is delayed, by between 5 and 45 days depending on the level of opposition. At 10%, a "rage quit" blocks execution until objecting holders have withdrawn. A Tiebreaker Committee of outside members can break a prolonged deadlock.³⁷ The on-chain vote enabling the system passed with 53.6 million LDO in favour, just above the 50 million quorum, and concluded on 30 June 2025.³⁸

Incidents and controversiesReport an error

• stETH discount (June 2022). Before withdrawals were possible, the only way to turn stETH into ETH quickly was to sell it, mostly through a Curve pool. After the lender Celsius paused withdrawals in June 2022, the pool became about 80% stETH and 20% ETH.⁴⁵ Wallets linked to the hedge fund Three Arrows Capital sold more than 56,000 stETH, and on 14 June stETH traded at almost a 7% discount to ETH.⁴⁶ Analysts at CoinShares said that without withdrawals there was no arbitrage to hold the price near ETH.¹³ Lido described the price as an "exchange rate" rather than a peg and said every stETH was backed by ETH. Jacob Blish, its head of business development, said the team had not expected the leverage built up after stETH was added to Aave.⁴⁷
• Share of staked ETH (2022 onward). Ethereum Foundation researcher Danny Ryan argued in 2022 that a single liquid staking protocol above thresholds such as one third, one half or two thirds of stake could extract outsized profits or censor transactions. He recommended that "Lido and similar LSD products self-limit", and that capital allocators avoid protocols holding more than 25% of staked ETH.⁴⁸ When Shapovalov opened a forum discussion in May 2022, Lido held slightly over 30% of stake. Supporters of a cap cited the risk of governance capture; opponents argued that capped stake would flow to centralised exchanges, which Lido had been founded to counter.⁴⁹ A Snapshot vote ending on 1 July 2022 rejected self-limiting by about 80.5 million LDO to 156,000.⁵⁰ Lido's development in the following years focused on dual governance and community staking, which Shapovalov said in 2025 improved Lido's image but did little for growth.²⁴ Its share was about 28% in January 2025, 23.9% on 1 January 2026 and 21.2% on 30 June 2026.⁴¹⁶
• Kelp DAO exploit (April 2026). After an exploit of Kelp DAO's rsETH token, deposits in Lido's EarnETH vault fell sharply. Lido said first-loss cover fully compensated depositors and no user funds were lost. The DAO also joined an industry effort, DeFi United, committing up to 2,500 stETH towards the rsETH shortfall.¹⁶

TimelineReport an error

See alsoReport an error

• Ethereum
• Aave, where stETH is used as collateral
• Terra, an early Lido deployment
• Solana, an early Lido deployment

ReferencesReport an error