Lido Finance Weighs Sunsetting Liquid Staking on Polkadot, Kusama

The proposal comes as MixBytes, Lido’s partner developer firm for Polkadot and Kusama liquid staking, announced it would stop supporting the networks.

AccessTimeIconMar 9, 2023 at 12:26 a.m. UTC
Updated Mar 10, 2023 at 8:48 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Decentralized finance (DeFi) protocol Lido Finance proposed sunsetting liquid staking on the Polkadot and Kusama ecosystems, according to a proposal posted to Lido’s governance forum on Tuesday.

In the proposal, decentralized finance (DeFi) applications developer firm and Lido partner MixBytes announced it would stop developing and providing technical support to Lido on Polkadot and Kusama liquid staking protocols as of Aug. 1, 2023.

“The decision was made because of several challenges, including market conditions, protocol growth, limited capacity and priority alignment,” Kosta Zherebtsov, chief product officer of MixBytes and the author of the proposal, said.

Lido has become the DeFi world’s largest protocol with some $9 billion worth of digital assets locked on the platform. Its growth has come as investor demand for liquid staking has grown steadily.

Staking is a popular yield-earning strategy in the digital asset space, where crypto holders can lock up and delegate their tokens, such as ether (ETH), to secure proof-of-stake blockchains in exchange for a reward. With liquid staking, investors can keep their capital liquid and use their staked tokens as collateral by receiving derivatives.

The proposal may affect some $25 million of assets. Data aggregator DefiLlama shows that investors have staked $22.3 million worth of DOT and $2.34 million of KSM, the native tokens of Polkadot and Kusama, on Lido.

Zherebtsov suggested halting acceptance of new DOT and KSM for liquid staking by March 15, and automatically unstaking tokens later in June, according to his proposed timeline.

The proposal is in a preliminary discussion stage yet.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.