What Is Lido (LDO)? How does Lido work?

Join Camnang24h to learn about the project “What Is Lido (LDO)? How does Lido work? The Lido DAO, Who Are the Founders of Lido? How Many LDO Coins Are There in Circulation?” through the article below. Lido (LDO) is a secure liquid staking solution for proof-of-stake (PoS) cryptocurrencies that supports Ethereum 2.0 (The Merge) staking and a growing ecosystem of other Layer 1 PoS blockchains. Users can stake their PoS tokens on Lido and receive a tokenized version of their staked assets at a 1:1 ratio. They can use this tokenized version of their staked assets to earn additional yield from other DeFi protocols while receiving staking rewards from their tokens deposited on Lido.

Related: What Is BENQI (QI)?

Introduction

One of the challenges of staking on PoS blockchains is the illiquidity of the staked assets. Once the tokens are locked, users cannot access or unstake them until the lock-up period is over, denying them the opportunity to earn additional yields from other DeFi protocols on the market. The complex validator set-up and high barriers to entry have also put off general retail users looking to participate in PoS staking.

To enhance the liquidity of staked tokens and to make staking more accessible, Lido is offering an alternative to traditional PoS staking.

What is Lido?

Founded in 2020, Lido is a liquid staking solution for Ethereum (ETH) and other PoS blockchains, including Solana (SOL), Polygon (MATIC), Polkadot (DOT), and Kusama (KSM).

Lido issues 1:1 tokenized versions of staked assets to users. This gives them liquidity for their staked PoS tokens, so they can earn staking rewards on Lido while participating in other DeFi on-chain activities for additional yields.

What is the price of Lido (LDO) today?

In this section one can follow the price and chart of Lido (LDO) traded today via the chart below. If you want to know where to buy Lido (LDO) at current rates, the top crypto exchanges to trade Lido (LDO) securities are currently Binance, MEXC, BTCEX, Bitrue, and OKX.

 

How Many LDO Coins Are There in Circulation?

At the time of writing, 0.9% of the total LDO supply is in circulation.

Lido launched its staking app on December 19, 2020 with 1 billion LDO tokens created at genesis. At time of writing, founding members of the Lido DAO possess 64% of LDO tokens. These are locked for 1 year, after which they will be vested over 1 year. At the time of writing, the only unlocked LDO in existence are 0.4% airdrop distributed to early stakers and DAO treasury tokens.

The allocation of these tokens is as follows: DAO treasury – 36.32% Investors – 22.18% Validators and signature holders – 6.5% Initial Lido developers – 20% Founders and future employees – 15%

Who Are the Founders of Lido?

Lido is a DAO that provides a liquid staking service for Ethereum 2.0, allowing users to earn staking rewards without maintaining staking infrastructure.

Lido DAO members include Semantic VC, ParaFi Capital, Libertus Capital, Terra, Bitscale Capital, StakeFish, StakingFacilities, Chorus, P2P Capital and KR1. Lido is also joined by a number of key angel investors, including Stani Kulechov of Aave, Banteg of Yearn, Will Harborne of Deversifi, Julien Bouteloup of Stake Capital and Kain Warwick of Synthetix.

The individuals and organisations behind the Lido DAO are proven within the DeFi space and have a track record of excellence.

How does Lido work?

To get more users to participate in securing (PoS) networks, liquid staking services like Lido allow users to stake any amount of PoS assets to earn block rewards. Liquid staking is an innovative alternative that addresses the illiquidity, complexity, and centralization of PoS staking by not locking up the user’s staked tokens. It also lowers the barriers to entry for staking and the opportunity cost associated with lock-up requirements.

When users deposit PoS assets to Lido, their tokens are staked on the PoS blockchain via the Lido protocol. It is a staking pool smart contract that manages users’ deposits and withdrawals, delegates funds to node operators, and determines the fees for staking rewards, as well as the minting and burning of tokens. In addition, the smart contract also contains a full list of node operators, their validation keys, and reward distribution records.

Users will receive a tokenized version of their deposited funds (stAsset tokens), which can be used to earn rewards simultaneously in the original deposited protocol and other DeFi protocols and decentralized applications (dApps), such as collateral for lending and yield farming to maximize rewards.

Take staking ETH as an example. As Ethereum transits to PoS under the long-awaited upgrade called The Merge (formerly known as ETH 2.0), users can each commit a minimum of 32 ETH to become a validator and receive payment for confirming transactions on the network. However, the minimum staking requirement is not feasible for users in general.

Lido allows users to stake as little as a fraction of 1 ETH to earn block rewards. After staking their ETH, users will receive stETH, an ERC-20 token that represents their deposited ETH on a 1:1 basis. The stETH tokens are minted when funds are deposited into the Lido staking pool smart contract, and will be burned when users withdraw their ETH tokens.

Users’ staked ETH will be distributed to the node operators (validators) on the Lido network and deposited into the Ethereum Beacon Chain to be validated. The funds are secured in a smart contract and validators cannot access them. After that, the Lido DAO will select, onboard, support, and add the validators’ addresses to the registry smart contract, after which the selected validators will be given a set of keys for validation.

The ETH users have deposited will be split into sets of 32 ETH among all active Lido node operators, who will use a public validation key to validate transactions involving users’ staked assets. Distributing users’ stakes across multiple validators can effectively eliminate single-point-of-failure risks associated with single-validator staking. Additionally, the node operators will set up an address to allow users to withdraw their staked ETH after the completion of The Merge.

The Lido DAO

To govern the Lido protocol in a decentralized way, Lido launched a decentralized autonomous organization (DAO) to make key decisions on how the protocol operates. This can ensure the protocol is aligned with the best interests of stakeholders and promote greater transparency and decentralization.

The Lido DAO governs a set of liquid staking protocols. It leverages smart contracts to determine and enforce rules to facilitate a decentralized decision-making process efficiently. These include managing fee parameters and distribution, as well as the addition and removal of node operators on the network.

What is LDO?

LDO is Lido’s native utility and governance token. It’s an ERC-20 token that has a total supply of 1 billion.

LDO is used to reward users on the network. It also grants holders governance rights within the Lido DAO, allowing them to participate in the governance process by voting on certain decisions. The more LDO tokens they hold, the more powerful their vote is.

How to buy LDO on Binance?

You can buy LDO on cryptocurrency exchanges like Binance.

1. Log in to your Binance account and click [Trade] – [Spot].

2. Search “LDO” to see the available trading pairs, including LDO/BUSD, LDO/USDT, and LDO/BTC.

3. Go to the [Spot] box and enter the amount of LDO you want to buy. In this example, we will use a Market order. Click [Buy LDO] and the purchased tokens will be credited to your Spot Wallet.

Closing thoughts

Lido’s liquid staking service provides users with all the benefits of staking without having to sacrifice the liquidity of their tokens. It caters to both small and large PoS token holders, giving them the flexibility to stake and unstake at any time. Furthermore, by eliminating complex staking setups and offering lower barriers to entry for PoS staking, liquid staking on protocols like Lido could boost the growth of DeFi in the future.

Disclaimer: Any information provided here including featured projects should not be considered investment or financial advice. Information is provided as-is without warranties. We cannot verify the claims or reliability of the projects listed. By using this information, Camnang24h only wants to provide information for your reference before deciding to invest, not advice. Self-study!

Source: Binance.com