Lido Finance Team to Launch Liquid Staking on Ethereum L2 Solutions

The Lido Finance team announced the launch of a liquid staking service for Ethereum 2.0 on Layer 2 scaling networks (L2).

Lido is launching stETH on Layer 2 🏝️

Ethereum is scaling, and so is Lido.

Lido stakers will soon be able to use their stETH assets in DeFi on Layer 2.

Read more about it here: https://t.co/QCsQry4V41

— Lido (@LidoFinance) July 18, 2022

“Ethereum scales, and Lido is following suit. We are very excited to reveal our plans to expand the service onto L2, starting with expanding stETH in the growing DeFi ecosystem [built on Layer 2 solutions]. For users, this means staking with lower fees and access to a new set of yield-enhancing decentralized applications,” the developers wrote.

Lido Finance — a service for liquid staking of cryptocurrencies. The protocol allows depositing coins into the relevant contract and receiving in exchange a bundle of “derivative” tokens, which can be used in DeFi services. In the case of Ethereum these are stETH tokens.

The project team stressed that it will not be limited to a single L2 solution. The service will launch “in all sufficiently tested Layer 2 networks with demonstrated economic activity.” They plan to start with Arbitrum and Optimism.

To implement this, Lido has already integrated with Aztec and Argent. The former is a privacy-focused Layer 2 network using ZK-Rollups, the latter is a wallet provider that employs zkSync from Matter Labs.

In the initial phase the team will provide support for wrapped stETH (wstETH). The collaborations with the two projects above will allow users to deploy wstETH on the available Layer 2 networks.

According to Dune Analytics, Lido is the largest liquid staking service for Ethereum 2.0. It accounts for over 31% of all assets on the corresponding deposit contract. TVL of the project is estimated at $6.25 billion.

In June 2022 the discount on stETH exceeded 5%. At the time of writing, derivative tokens are trading about 2.3% below native Ethereum on Curve.

Earlier in the same month, the Lido decentralized organization behind the project initiated a vote on the cap on the protocol’s share in the Ethereum 2.0 staking pool.

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