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Lido Finance Weighs Sunsetting Liquid Staking on Polkadot, Kusama
The proposal comes as MixBytes, Lido’s partner developer firm for Polkadot and Kusama liquid staking, announced it would stop supporting the networks.
Updated Mar 10, 2023, 8:48 p.m. Published Mar 9, 2023, 12:26 a.m.
Decentralized finance (DeFi) protocol Lido Finance proposed sunsetting liquid staking on the Polkadot and Kusama ecosystems, according to a proposal posted to Lido’s governance forum on Tuesday.
In the proposal, decentralized finance (DeFi) applications developer firm and Lido partner MixBytes announced it would stop developing and providing technical support to Lido on Polkadot and Kusama liquid staking protocols as of Aug. 1, 2023.
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“The decision was made because of several challenges, including market conditions, protocol growth, limited capacity and priority alignment,” Kosta Zherebtsov, chief product officer of MixBytes and the author of the proposal, said.
Lido has become the DeFi world’s largest protocol with some $9 billion worth of digital assets locked on the platform. Its growth has come as investor demand for liquid staking has grown steadily.
Staking is a popular yield-earning strategy in the digital asset space, where crypto holders can lock up and delegate their tokens, such as ether (ETH), to secure proof-of-stake blockchains in exchange for a reward. With liquid staking, investors can keep their capital liquid and use their staked tokens as collateral by receiving derivatives.
Read more: Liquid Staking Replaces DeFi Lending as Second-Largest Crypto Sector
The proposal may affect some $25 million of assets. Data aggregator DefiLlama shows that investors have staked $22.3 million worth of DOT and $2.34 million of KSM, the native tokens of Polkadot and Kusama, on Lido.
Zherebtsov suggested halting acceptance of new DOT and KSM for liquid staking by March 15, and automatically unstaking tokens later in June, according to his proposed timeline.
The proposal is in a preliminary discussion stage yet.
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