The Ethereum Merge marked a pivotal upgrade in Ethereum's history, transitioning from proof-of-work (PoW) to proof-of-stake (PoS). This shift eliminated energy-intensive mining and catalyzed innovations like Staking-as-a-Service (SaaS), enabling users to stake ETH without managing validator nodes.
This review explores Lido Protocol, the leading SaaS platform, with over $25 billion in Total Value Locked (TVL) as of September 2024. Lido simplifies staking by allowing participation with any ETH amount, bypassing the 32 ETH requirement for solo validators.
What Is Liquid Staking?
Liquid staking unlocks liquidity for staked assets on PoS blockchains. Unlike traditional staking, users receive Liquid Staking Derivatives (LSDs)—tokens representing staked assets that accrue rewards and can be traded or used in DeFi.
Liquid Staking Tokens (LSTs)
- stETH: Lido’s primary LSD, pegged 1:1 to ETH and rebases daily to reflect staking rewards.
- wstETH: A wrapped, non-rebasing version of stETH for DeFi compatibility.
How Lido Finance Works
Core Features
Staking Pool: Users deposit ETH to mint stETH, which accrues rewards from:
- Consensus Layer: PoS block rewards.
- Execution Layer: Transaction fees/MEV.
- Governance: Managed by Lido DAO using LDO tokens for voting on fees, node operators, and upgrades.
- Fees: 10% of rewards (5% to DAO, 5% to node operators).
Key Components
- Node Operators: 36 whitelisted validators ensure security (0 slashing incidents to date).
Smart Contracts:
- Staking Pool: Handles deposits/withdrawals and mints stETH.
- Oracles: Update stETH balances daily.
Lido’s Ecosystem Tokens
| Token | Type | Use Case |
|--------|---------------|-----------------------------------|
| stETH | Rebasing | DeFi integrations, trading. |
| wstETH | Non-rebasing | Compatible with non-rebasing DeFi.|
Supported Chains: Ethereum (stETH), Polygon (stMATIC), Solana (stSOL), Polkadot (stDOT).
wstETH Networks: Arbitrum, Optimism, Base, and 10+ others.
Lido DeFi Integrations
Top Platforms Using stETH
DEXs:
- Curve (stETH/ETH pool, 3–5% APR).
- Uniswap (wstETH/ETH pool, 2–5% APR).
- Lending: Aave (stETH collateral, 3–8% APR).
- Restaking: EigenLayer ($2.19B stETH restaked).
👉 Maximize yields with Lido stETH
Lido vs. Competitors
| Feature | Lido | RocketPool |
|--------------|-------------------------------|------------------------------|
| Validator Access | Whitelisted nodes | Permissionless |
| Liquidity Incentives | LDO rewards | Organic growth |
Lido prioritizes efficiency; RocketPool emphasizes decentralization.
FAQs
How do I stake ETH on Lido?
- Connect your wallet to Lido’s platform.
- Deposit ETH to receive stETH.
- Use stETH in DeFi for additional yields.
Where can I buy LDO?
Available on Binance, Coinbase, Uniswap.
What are Lido’s risks?
- Smart contract vulnerabilities.
- Centralization of node operators.
Final Thoughts
Lido dominates Ethereum liquid staking by balancing liquidity, security, and DeFi integration. While competitors like RocketPool offer decentralization, Lido’s user-friendly model and extensive ecosystem make it the top choice for 2025.
Key Takeaway: stETH unlocks Ethereum’s staking potential while keeping assets liquid—critical for the evolving DeFi landscape.