Lido Staking Protocol to Cease Operations on Polygon, Shifts Focus Back to Ethereum

Lido Finance has announced its decision to end staking services on the Polygon network, citing limited user adoption, evolving DeFi trends, and a renewed strategic emphasis on Ethereum.

In a recent blog post, the Lido Finance team said the decision was made after a request by Lido DAO Token (LDO) holders, “extensive DAO forum discussion,” and a community vote where 99% favored the proposal.

The proposal considered two options: discontinuing Polygon support or reassessing the economics of Lido’s middleware.

Lido Exits Polygon Amid Challenges

The decision to exit Polygon was attributed to multiple challenges, including high maintenance demands, insufficient staking rewards, and the increasing prominence of zkEVM technology in the DeFi space.

Lido’s team stated that the rise of zkEVM-focused solutions reduced demand for liquid staking on Polygon’s Proof-of-Stake (PoS) chain, impacting its growth potential within the DeFi ecosystem.

“This transition has led to reduced demand for liquid staking solutions on Polygon POS, affecting Lido on Polygon’s potential as a foundational DeFi building block,” the Lido team said.

“Additionally, alternative liquid staking solutions have been built within an ecosystem that proved smaller than initially anticipated.”

Shard Labs, which initially proposed Lido’s Polygon integration in 2021, acknowledged the shift in DeFi priorities.

They noted that the community’s pivot toward zkEVM solutions had diminished the role of Polygon’s PoS chain as a core DeFi component.

As of December 16, Lido has stopped accepting new staking requests on Polygon.

However, users can continue withdrawing their staked MATIC via Lido’s interface until June 16, 2025.

Justification

The Lido on Polygon sunset process is taking place following extensive discussions across Lido DAO forum and a governance vote by LDO token holders.

A strategic refocus on Ethereum and lack of scalability on Polygon POS has led to the discontinuation of staking…

— Lido (@LidoFinance) December 16, 2024

All staking rewards have been suspended, and there will be a brief halt in withdrawal services between Jan. 15 and Jan. 22, 2024.

By June 2025, Lido’s front-end support for Polygon will end, with users required to process withdrawals through browser tools.

Lido Exits Solana Due to Financial Constraints

Lido’s exit from Polygon follows a similar move last year when it ceased operations on the Solana blockchain due to financial constraints and low fees.

This trend highlights Lido’s strategy to streamline operations and concentrate resources on Ethereum, where it holds the largest market share for liquid staking.

Currently, Lido’s total value locked (TVL) stands at $38 billion, according to DefiLlama, making it the largest liquid staking protocol in the DeFi market.

Data from Dune Analytics shows that Lido’s staked tokens on Polygon are valued at $45 million, while Polygon’s overall TVL surpasses $1.2 billion.

Lido’s departure from Polygon aligns with broader shifts in the DeFi space.

Aave, a leading lending protocol, has also proposed ceasing operations on Polygon due to risk concerns related to bridged assets.

Aave chain founder Marc Zeller submitted the proposal on December 13, urging caution as Polygon’s governance plans to deploy over $1 billion in stablecoin reserves for yield farming on external protocols.