cryptocurrency staking service provider has announced plans to expand staked Ether (stETH) support across the Ethereum layer-2 (L2) network ecosystem.

In a blog post on Monday, the Lido team said they would be the first to start supporting Ether (ETH) staking over a bridge to L2 using wrapped stETH (wstETH).
In the future, users can bet directly on L2 "without bridging their assets  to the Ethereum main net."

Regarding the partnership, the team said prior to the announcement that it had already integrated its bridge staking service with Argent and Aztec. He added that the next collection of partnerships and integrations will be released in the coming weeks.

Given that L2s are intended to lower the cost of Ethereum transactions, the team claims that this move will allow users to stake ETH with lower fees while also gaining "access to a new suite of DeFi applications to amplify yields:"

"We believe that in the future, a large portion (if not the majority) of economic activity and transaction volume will migrate to both general use and purpose-specific Layer 2 networks," it said.

"Each of these networks will benefit from or require staking solutions to support their users' economic activities and ensure that all users of Ethereum ecosystem networks have the ability to participate in securing Ethereum."

Selling 2% of the LDO token supply

According to Lido's website, the platform is betting over 4.2 million ETH, worth about $ 6.5 billion for a decentralized finance platform (DeFi). It offers staking premiums to a variety of other assets, such as Solana (SOL), Kusama (KSM), and Polkadot (DOT), but is primarily used for  ETH staking services with annual revenues of about 3.9%.

When a user deposits  ETH on the platform, a tokenized version of the deposit is created as stETH. It can be used for other lending or concession services from other DeFi protocols.
The intended ratio of stETH to ETH is 1:1. However, during the aftermath of the $40 billion Terra ecosystem collapse in May, the peg famously fell off to represent 0.95 of 1 ETH.

Long-term hodlers and stakers face few risks as a result of the asset's depegging. It does, however, pose a significant risk of causing liquidations for anyone who takes out leveraged positions against the asset. Celsius Network and Three Arrows Capital were reported to be heavy users of stETH.

The peg is currently at the correct ratio, with Lido offering a 1:1 exchange for ETH and stETH. However, partnered decentralized exchange aggregator 1inch is also offering a 2.36 percent discount to mint stETH, implying that depositors can now get more stETH value than the amount of ETH they deposit via 1inch. 


Jul 19, 2022
Crypto News

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