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Usha Yadav
Jul 19, 2022
by Usha Yadav

Lido Finance Announces to Bring Staked Ether to Layer-2s

Lido Finance

Table of contents

  1. Beacon Chain For Proof-of-Stake (PoS)
  2. Rebasable Tokens
Lido announced on Monday that it would support wstETH on layer-2s, a wrapped version of stETH. The business believes this move will improve stETH's market capitalization and usage while decreasing investor gas costs. Scaling staked ether (stETH) to layer-2 Ethereum protocols is what staking protocol Lido Finance is doing as the price of ether rises in preparation for its long-awaited "Merge" to Proof-of-Stake validation.

Beacon Chain For Proof-of-Stake (PoS)

Investors in Lido stETH earn staking incentives when they lock ether on the Beacon Chain for Proof-of-Stake. Although the Beacon Chain Merging for ETH has been planned since 2020, Ethereum developers chose September 19 as their newest merge target last week. Holders of stETH will still have to wait six to twelve months to unlock tokens after The Merge. On integrated DeFi protocols like Curve, stowed ether can be traded.

Rebasable Tokens

However, layer-2s that do not enable "rebasable" tokens that alter the value in response to staking incentives are currently incompatible with stETH.

As stated by Lido, wstETH delivers stETH a set value, enabling the wrapped token to be traded on well-known layer-2s like UniSwap, ArcX, 1inch, and SushiSwap. The stETH Curve liquidity pool nearly ran out of ether a month prior, making it challenging for investors to liquidate positions. The lack of liquidity led to stETH's price losing its historical parity with ether and falling to a low of 0.93 ETH.

According to CoinMarketCap, one stETH is currently trading for 0.98 ETH. In the previous week, LDO, Lido's DAO token, increased by more than 130%. LDO is scheduled to be listed on Tuesday's exchange, according to FTX, a prominent DeFi (decentralized finance) trading platform.

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Ether Proof of Stake (PoS) Beacon chain Lido stETH Layer-2s
Lido Finance Announces to Bring Staked Ether to Layer-2s
Usha Yadav
Usha is a diehard crypto enthusiast and has been actively writing on different facets of the blockchain and crypto world. She has authored many research articles on cryptocurrency and aims to provide informational and quality content to readers. She firmly believes that crypto has a great potential to redefine the world of finance and blockchain.