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Coin Profile - Lido DAO (LDO) and the Liquid Staking Solution

The price for Lido DAO (LDO) saw a steady surge throughout the summer of 2022, a time when most crypto majors and altcoins were in a steep decline. Find out why and discover LDO’s connection with the Ethereum Merge.

What is Lido DAO (LDO)?

Lido DAO is a liquid, non-custodial staking platform for Ethereum 2.0 and other Proof-of-Stake chains.

LDO_Lido_DAO_price_history$LDO Price Evolution

Users can stake Ethereum and other supported tokens without having to lock their coins up, creating liquidity for the tokens. Users enjoy a simplified way of staking ETH and other assets and they can use their staked tokens across DeFi.

How it works:

By staking on the Lido platform, users receive daily rewards in the form of derivative tokens called stETH (staked ETH), which are pegged 1:1 to the staked crypto asset. In the case of Ethereum, the stETH is a tokenized version of staked Ethereum and these “liquid” tokens can be freely traded during the staking process.

Lido stakers can enjoy an Ethereum-based staking program that is easier, more assessible, and more convenient that staking actual ETH.

  • There's no minimum deposit (Ethereum staking requires multiples of 32 $ETH).
  • There's no requirement to lock up the staked tokens - you are free to trade and otherwise use them throughout DeFi.
  • Ethereum staking requires some technical knowledge, whereas Lido staking is simplified.

Launched originally on Ethereum, Lido has expanded to other chains, adding Terra and Solana in 2021. Since then, they’ve also added Polygon (POL), Polkadot (DOT), and Kusama (KSM). Each blockchain network has its own derivative token, such as stSOL on Solana.

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Lido’s decentralized autonomous organization (DAO) controls the smart contract that runs the staking program. Elected staking providers, who do not have direct access to user funds, oversee protocol changes and implementation, as well as the treasury.

Project status

  • Dec. 2020: Lido DAO launches
  • March 2021: Adds Terra blockchain
  • Sept. 2021: Adds Solana
  • November 2021: Adds Polygon
  • May 2022: Adds Polkadot-based Moonbeam

Team

  • Kasper Rasmussen is Lido’s Co-Founder & CMO. Previously, he was Bitfinex’ Marketing Director for 3 years. Rasmussen holds a Masters in E-Business & Info, and a Bachelor's degree in International Business.
  • Jordan Fish, Co-Founder & CEO does not have a transparent business profile but is active on Twitter.
  • The development team is non-transparant.
  • Lido's team page leads to a short explanation of how a bunch of VCs, staking validators, and major crypto investors are on the DAO.

Making headlines

Does it have staying power?

Competitive?
According to DefiLlama, LDO is the second largest liquid staking protocol by TVL (total value locked), just behind MakerDAO and closely followed by AAVE.

  • Lido is the top ETH staking protocol.
  • LDO price action has been almost inverse of Bitcoin and most altcoins since the Luna crash and subsequent market mayhem. From June 10th to Sept 7th, 2022, when most of the market went crashing, LDO climbed by 220% (BTC fell over 33%).
  • Lido DAO partners with some of the biggest names in Web3, including Curve, MakerDAO, AAVE, Ledger, 1Inch and FTX.

Hiring?
Lido DAO currently has 8 open positions, including both CeFi and DeFi business development managers and several analyst positions.

Social traction
Lido platforms have over 160k+ social followers. Their Twitter account has 106K followers but little organic engagement.

Ever been hacked?
No.

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$LDO Tokenomics

LDO is a DAO token that grants voting rights to all token holders while providing additional utility through the staking protocol. The DAO itself governs liquid staking across multiple blockchain networks and decides on and executes protocol upgrades. The more LDO you hold, the more voting power you will have in the DAO.

Total/Max supply
1 Billion

Token allocation

  • 36.32% - DAO treasury
  • 22.18% - Investors
  • 6.5% - Validators and signature holders
  • 20% - Initial Lido developers
  • 15% - Founders and future employees
LDO_Lido_DAO_tokenomics$LDO Token Metrics

Token vesting
With the exception of the DAO Treasury allocation, all tokens were locked for 1 year followed by a 1-year vesting period.

Funding
The Lido project has raised a total of $143 million:

  • $73 million was raised during the ICO from VCs, led by Paradigm.
  • $70 million came from a venture round led by a16z.
  • Individual investors in the project include MakerDAO Founder, Rune Christensen, and Synthetix Founder, Kain Warwick.

Token utility

  • Stake - users stake tokens to get daily rewards (no minimum deposit).
  • Mint - when staking, you mint staked tokens at a 1:1 ratio to the underlying asset.
  • DeFi usage - while staked, your liquid assets can be used across DeFi (i.e., as lending collateral or for yield farming) to compound your yield.
  • DAO governance - LDO grants onchain voting rights to token holders.

Decentralized?
Lido is one of the few Web3 platforms that tracks its own progress in terms of decentralization. They’ve published a “Lido on Ethereum Scorecard” to self-monitor in a transparent way while inviting community input.

  • While ETH 2.0 staking requires stakers to choose one validator, Lido users stake across many validators to minimize staking risk.
  • Validators are elected by token holders; DAO governance controls purse and protocol decisions.
  • In January of 2021, the team published a blog stating that “founding members of the Lido DAO possess 64% of LDO tokens.”
  • Currently, the DAO treasury holds 14% of LDO tokens, Besides that, the top 10 wallets 23.05% of LDO supply.

Burning Mechanism
No

Code Audit
Lido DAO has employed a series of audits, which can be reviewed here.

Bug bounty?
Yes, they use a bounty program through Immunefi.

Next up for Lido DAO (LDO)

Much of Lido’s future path will be dictated by the outcome of the Ethereum Merge. Lido’s post-merge status and plans are detailed on their blog.

  • Post Merge, validators will become Execution Layer block proposers and will earn priority fees and Maximal Extractable Value (MEV) rewards. Ultimately, this will increase the rewards for stETH stakers.
  • The DAO is currently discussing ways to determine how and when MEV can be extracted and how rewards will be paid out.

Continue your DYOR…

Website
$LDO on Quadency
Blockchain explorer
Documentation
Github
Twitter
Discord

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Disclaimer: The content of this article is for general market education and commentary and is not intended to serve as financial, investment, or any other type of advice.