Lido Finance Introduces Ethereum Layer-2 Staking and LDO Incentives
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After the team admitted that numerous layer-2 networks had demonstrated economic activity in July, they first announced their intention to extend to L2. At that time, Lido Finance intended to expand staked Ether (stETH) to layer-2 Ethereum protocols as the price of Ether climbed in anticipation of its long-awaited "Merge" to Proof-of-Stake (PoS) validation. Today, October 7, they officially launched their new deployment to L2 networks Arbitrum and Optimism.
Lido Finance to Provide Liquid Staking
In contrast to staking Ethereum directly and locking funds, Lido Finance provides liquid staking, which allows stakers greater flexibility as they can withdraw their funds at any time. Leaders in the industry, like Alesia Haas, CFO of Coinbase, have remarked that institutional staking would not catch on unless the problem of asset lockup can be resolved. Lido offers this adjustable or liquid staking option, resulting in its gaining popularity.
Lido-Wrapped Version of stETH
Lido's wrapped stETH (wstETH) token can connect to the two networks due to the initial stage of its layer-2 implementation. The Lido-wrapped edition of the Ethereum liquid staking token maintains a stable balance of stETH for usage in DeFi applications that need a consistent balance method. StETH is the Ethereum liquid staking token issued by staked ETH.
The Project's Objective
Commencing on launch day, Lido would reward wstETH connected across each network with 150,000 LDO tokens monthly. The project intends to increase wstETH liquidity for farming rewards on DeFi collaborators, including Kyber Network, Balancer, and Curve.
Lido Finance claims to have $7.4 billion of ETH staked - approximately 5.5 million tokens - or almost 40% of the total stake. The cryptocurrency epidemic began to spread earlier this year, and stETH lost its peg to ETH but quickly recovered.