Lido DAO Token

What is Lido DAO (LDO)?

Lido combines the words “liquid” and “DAO,” clearly encapsulating what it brings to staking Ethereum.

Lido allows users to stake various cryptocurrencies without being subject to obstacles like minimum deposits. The platform was inspired by the fact that, before its Eth 2.0 merge, Ethereum staking had a minimum deposit of 32 ETH. Due to this, it needed stakers to have certain infrastructure.

Not only that—stakers would have to lock their ETH away for an unknown amount of time. Setting aside so much money without a clear goal in sight was not an appealing prospect for many.

Lido eliminated these issues since it’s a “liquid” staking service. Even better, users could leverage their staked tokens to participate in on-chain activities, such as lending, to compound their yields earned from staking.

The fact that Lido is a DAO, or decentralized autonomous organization, is also extremely important. This is because the only avenue for retail investors (most of whom couldn’t afford 32 ETH) to stake ETH was with a handful of centralized exchanges.

Being a DAO, Lido offers Ethereum holders a decentralized alternative to these centralized exchanges.

Of course, Lido doesn’t just offer ETH staking. Users can stake various other cryptocurrencies, including SOL, MATIC, and DOT, to earn rewards and use them in decentralized financial activities.

When Was Lido DAO Launched?

Lido DAO was created in October 2020 and launched just two months later. During this December 2020 launch, 1 billion LDO tokens were created.

As per Lido’s introductory blog post, the project started with most of the issued LDO tokens being locked. In fact, the only unlocked LDO tokens at the time were the 0.4% of the supply airdropped to early stakers and the DAO treasury.

Who are the Founders of Lido DAO?

Lido DAO was founded by Konstantin Lamashuk, Vasiliy Shapovalov, and Gordon Fish.

Lido DAO has significant investor backing. The list of angel investors for the project includes Stani Kulechov of Aave, Will Harborne of Deversifi, Julien Bouteloup of Stake Capital, and Kain Warwick of Synthetix.

Prominent Lido DAO members include firms like Semantic VC, Parafi Capital, Libertus Capital, Terra, Bitscale Capital, StakeFish, StakingFacilities, Chorus, P2P Capital, and KR1.

How Does Lido DAO Work?

The basic principle of Lido DAO is that it offers users a platform to stake their crypto holdings to earn rewards without worrying about minimum lockups or staking infrastructure.

Users can stake cryptocurrencies like ETH, SOL, DOT, MATIC, and KSM to Lido and earn daily rewards, irrespective of how much or little they deposit.

When these crypto assets are staked to Lido, staked tokens are minted for the user. These staked tokens, such as stETH or stDOT, are issued at a 1:1 ratio to the user’s deposit.

They can then be used to generate yield. While the user’s ETH or other deposits earn daily rewards, staked tokens like stETH can be deployed towards DeFi. Users can use them as collateral, lend them out, yield farm, and more.

The official Lido blog provides a selection of guides on using staked tokens on DeFi platforms such as Aave.

Technologically, Lido is a set of smart contracts consisting of several parts:

• Staked tokens, such as stETH and stDOT
• Deposits and staked token minting
• Node operator registry
• Beacon chain oracles and staked token balance update
• Withdrawals

Withdrawals of staked ETH do not activate until the Ethereum hard fork Shanghai goes through. However, stakers can still swap stETH to ETH on secondary markets like Curve or Uniswap to effectively unstake their tokens.

What Makes Lido DAO Unique?

Lido was designed for a very specific niche in the cryptocurrency industry. The developers of Lido DAO realized that it was very difficult for retail investors to stake Ethereum following the launch of its beacon chain.

Many centralized cryptocurrency exchanges realized this, too, and began allowing ETH2.0 staking. However, for users who prefer decentralized options as well as versatile options for compounding yield, Lido quickly became the platform of choice.

How is the Lido DAO Network Secured?

The LDO token is an ERC-20 token on Ethereum, so it is secured by the Ethereum blockchain.

In terms of risk, Ethereum’s security is extremely low, given how widespread and decentralized it is. Of more importance to a project like Lido, is a smart contract security risk.

To this end, Lido DAO has been audited by industry leaders in blockchain security. Among the firms to have audited Lido DAO are:

• Quantstamp. This firm works to secure the decentralized internet and has protected over $8 billion in digital asset risk from hackers. Quantstamp works with over 170 start-ups, foundations, and enterprises.
• MixBytes. A team of experienced developers who provide blockchain solutions, smart contract audits, and tech advisory.
• Sigmaprime. Experienced firm in information security, blockchain, and system design. Sigmaprime performs security assessments for decentralized systems and blockchain infrastructure R&D.

What is the Use of LDO?

The Lido DAO token is the governance token of the Lido platform. It governs the direction of Lido, and holders of LDO vote on major decisions, such as what liquid staking services to build.

LDO voting weight is proportional to the amount of LDO a voter stakes in the voting contract. The more LDO is locked in the holder’s voting contract, the more decision-making power that holder is granted.

Who Controls Lido DAO?

Lido is managed by the Lido DAO, which is composed of LDO holders. The DAO members govern Lido to ensure its efficiency and stability.

Besides technical development, the Lido DAO’s mandate is to promote Lido and recruit new users, node operators, and validators. The Lido DAO’s main tools to achieve these goals are educational content, promotional campaigns, and affiliate marketing.

Lido DAO governance is a three-step process. First, ideas and proposals are published on the Lido research forum so that the community can discuss them. This is followed by seven days of feedback, discussion, and refinement.

The next step is gasless Snapshot voting. This also takes 7 days, but it mustn’t end on the weekend. A minimum quorum dictates that more than 5% of the total token supply must vote.

Finally, Aragon voting is engaged. Aragon is a DAO framework featuring on-chain voting. Aragon voting lasts 72 hours and includes a 48-hour conventional voting phase and a 24-hour objection phase.

Detailed information on DAO membership and guides on voting can be found in the Lido DAO member manual.

How Much Is LDO In Circulation?

Each of Lido DAO’s founding members received a significant number of LDO tokens. Investors, for example, were given over 221 million LDO, and 65 million LDO went to validators and signature holders.

200 million LDO were granted to the initial Lido developers, and 150 million LDO were reserved for the project’s founders and future employees.

How Do You Buy LDO?

You can buy LDO on a variety of cryptocurrency exchanges, including several exchanges that the cryptocurrency community considers top-tier.

However, if you prefer decentralized exchanges, you can quite easily find LDO on DEX platforms like Uniswap or Sushiswap.

You can buy LDO using a variety of assets. Fiat currency can be used on many cryptocurrency exchanges, and it’s also easy to buy LDO with stablecoins like USDT or USDC.

On decentralized exchanges, you can find LDO paired with the likes of DAI or even stETH.

Is It Possible to Buy Lido DAO Instantly?

You can buy LDO instantly on a centralized exchange, but that’s mainly because an exchange account isn’t a wallet and there’s no on-chain settlement going on.

When you buy LDO on an exchange, the CEX is simply giving you an entitlement to a small amount of the LDO they hold in their wallet. This means that the CEX can take part in Lido DAO governance, not you.

How Do You Store LDO?

Many centralized exchanges offer staking options for tokens similar to what Lido does, so they can be considered competitors to the Lido platform.

As such, a CEX may not be the best place to store LDO tokens since there’s an inherent conflict of interest in governance.

Luckily, LDO is an Ethereum-based token and can be stored in any ERC-20 compatible wallet, such as Metamask, the GameStop Wallet, Ledger and Trezor devices, and more.

Lido DAO Energy Consumption

As an ERC-20 compatible token, LDO is just one of many hundreds, if not thousands, of crypto assets hosted by Ethereum.

While there was a period when Ethereum was considered quite energy-hungry, that time is now over. Following Ethereum’s shift to proof-of-stake, it has cut its energy consumption by 99.95%.

Is LDO a Good Investment?

Lido DAO fills a valuable niche in the cryptocurrency industry. It also stays true to one of the main ideologies of the community, that of decentralization.

Ethereum has shifted to proof-of-stake, but Lido has not stood still. Having started with ETH, the platform offers various tokens that users can stake.

This growing element of blockchain agnosticism provides a vital service to retail investors. Diversified investors have to juggle an increasing number of platforms and wallets, which is a daunting task.

Lido offers a single platform where retail investors can safely deposit their tokens to earn from them, and the allure of engaging in DeFi to compound that yield is an enduring one.