The Lido Finance liquid staking protocol may discontinue operations on the Polygon blockchain. Among the reasons cited for the proposal are recent technical issues, roadmap uncertainty, and the absence of other LSD-providers.
The Lido community released a proposal to terminate the Lido project on Polygon, citing reasons including recent technical issues; uncertainty Polygon roadmap; no other staking providers on Polygon; it is recommended to focus on a native ETH liquid staking provider.…
— Wu Blockchain (@WuBlockchain) October 19, 2023
Among other reasons is the low profitability staking. Given the current TVL of 151 million MATIC, a reward rate of 4.17% and a 5% DAO fee, the project would earn $166,863 per year.
The proposer noted the suspension of withdrawals from the protocol for 25 days after the blockchain upgrade that caused an error. He said the team must account for this reputational risk, and expressed satisfaction that there was no FUD at the time.
The developer noted that the long-term transition to the Polygon 2.0 architecture presents a significant challenge. The project will have to face substantial changes and bear audit costs, which could trigger the aforementioned issues.
The proposer suggested focusing exclusively on work in Ethereum and not taking on the risks of other blockchains with low TVL.
Recently, Lido Finance announced the termination of Solana support.
Earlier, Glassnode assessed the impact of Lido’s liquid staking on Ethereum and allowed for further growth of the protocol’s share in the space.