Ether staking giant Lido will work with two Cosmos blockchain ecosystem projects to bridge its staked ether (stETH) tokens to the Cosmos network, in a step that could see the transfer of millions of dollars in liquidity between the two blockchains.
Liquid staking has become a popular way for investors to earn yields on their digital assets, making it one of the largest decentralized finance (DeFi) sectors with $16 billion of value combined, per data from DefiLlama. Liquid staking platforms, including Lido, allow users to keep their locked-up tokens liquid with a derivative token that can be used for lending and borrowing.
Lido’s stETH has a $13.8 billion market capitalization, and the tokens are available in two types: a rebasing token, stETH, and a wrapped, auto-compounding token, wstETH, which will be used to bridge to Cosmos.
Lido has picked cross-chain platform Neutron and full-stack development network Axelar for the bridging project, CoinDesk learned Thursday. Neutron and Axelar have each committed 1% of their respective token incentives to build liquidity for wrapped stETH and wstETH.
“We are excited to be part of the effort to bring one of the biggest liquid staking tokens, Lido’s staked ETH to the Cosmos ecosystem,” Avril Dutheil, core contributor to Neutron, said in a message to CoinDesk. “It is a reflection of the value of cross-chain support and our commitment to bringing liquidity and users to the Cosmos ecosystem.”
Once on Cosmos, the wstETH token can be used on several blockchains that are built on Cosmos’ Inter-Blockchain Communication (IBC) technology platform. These include Cosmos, Cronos, Sommelier, and major DeFi protocols such as Osmosis and dYdX.
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