• Lido is a liquid staking solution for Ethereum (ETH) and other PoS blockchains, including Solana (SOL) and Polygon (MATIC).
• LDO is Lido’s native utility and governance token. It’s an ERC-20 token that has a total supply of 1 billion. 

Lido is a staking solution for altcoins such as Ethereum (ETH), Solana (SOL) and Terra, Polkadot (DOT), Polygon (MATIC) blockchains that use the Proof-of-Stake (POS) consensus mechanism.

Staking is the process of locking one’s crypto assets for a fixed period in exchange for yields.

Staking on PoS blockchains has its disadvantages, this includes the illiquidity of the staked assets, inaccessibility, and immovability while staking, Lido solves this by increasing staked ETH’s liquidity and lowering the requirements for stake participation

It allows users to stake their Ether (ETH) assets without requiring them to participate in maintaining the infrastructure, this is achieved through the Lido decentralized autonomous organization (DAO)

Lido DAO Governance

Lido DAO is an Aragon-powered organization, a platform with a complete end-to-end framework that creates tools to enhance decentralized technologies.

The Lido DAO is also responsible for distributing funds from the Lido Treasury and covering expenses like development updates and community initiatives, in summary, it is responsible for the governance and upkeep of the network.

The native LDO crypto asset provides governance rights to Lido’s community members by allowing them to vote in certain decisions and is also used to reward users on the network. The more LDO that a user holds, the more powerful their vote is.

LDO is also a MiniMeToken, a cloneable ERC-20 token created to conveniently multiply tokens with a matching balance distribution as their parent token.

Lido staking apps, the Lido DAO, and the native Lido DAO token (LDO) make up the core structure of the Lido offers. Because Lido is a decentralized staking protocol.

The Lido Mechanism

The Lido DAO is primarily designed to maintain and stabilize asset liquidity, when a user deposits their assets to Lido, the tokens are staked on the Lido blockchain and in return they receive minted staked tokens.

Users are required to first link their wallets to Lido’s interface and deposit their tokens, which will then provide them with the staked tokens.

Example: When users stake Solana (SOL) on the Lido staking pool smart contract, they receive staked Solana tokens (stSOL). An stSOL holder can use the token within the Lido crypto ecosystem, including various popular decentralized finance (DeFi) platforms like Yearn, Curve, and Maker.

Lido’s collected SOL will be then distributed to participating validators to further increase stSOL’s value.

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.

Benefits Lido Promises to Ethereum

The Lido protocol allows users to stake their ether without setting up validator nodes. The platform does not require that nodes deposit collateral equal to the staking position to become a validator. Instead, the Lido DAO selects nodes with a suitable track record of staking assets, requiring only one asset deposit in the protocol contract.

Lido issues derivative tokens that solve the capital inefficiency problem by bypassing requirements such as letting tokens stay locked until smart contracts and transfers are implemented.

This model is what the Lido network refers to as “capital efficiency.”

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 whales and small PoS token holders, giving them the flexibility to stake and un-stake at any time.

Additionally, Lido eliminates complex staking setups and offers lower barriers to entry for PoS staking, liquid staking on protocols like Lido could boost the growth of DeFi in the future.