What is Lido DAO (LDO) ?

Lido DAO is a liquid staking protocol that allows users to stake their assets and receive tokens representing those assets and their staking rewards. It supports staking liquidity for various blockchains like Ethereum, Solana, Kusama, and Polygon. The platform uses LDO tokens for governance and paying out daily staking rewards. Lido DAO enables users to stake assets without maintaining staking infrastructure, giving an easy way to earn rewards.

History of Lido DAO (LDO)

Who Created Lido DAO

Lido was founded in 2020 by ChonPen Wang, Kay Khemani, Han Chang, and Terence Wang.ChonPen previously worked at Coinbase as an engineering manager. Kay was a product manager at ConsenSys. Han worked at Meta/Facebook as a software engineer. Terence was an early employee at Coinbase.

Project Origin

The founding team wanted to solve the problem of staking illiquidity for Ethereum and let users earn staking rewards without locking up funds or running infrastructure.

History

• Q4 2020: Lido DAO project starts, v1 of Lido for Ethereum staking launches.
• Q1 2021: $2 million seed funding round from Paradigm, ParaFi Capital, Coinbase Ventures. Lido hits $1 billion in staked ETH.
• Q2 2021: Launches Lido for Terra staking. Raises $10M in funding led by Andreessen Horowitz.
• Q3 2021: Launches Lido for Solana and Kusama staking. Lido hits $5 billion in staked assets.
• Q4 2021: Lido launches Polygon staking and staked ETH reaches 3 million. Partners with Curve and Yearn Finance.
• Q1 2022: Over $10 billion staked assets across chains. v2 of Lido launches with better UI and gas optimizations.
• In Oct 2023: Participants in the Lido DAO vote to cease operations on Solana. This decision was supported by nearly 93% of participant.

How Does Lido DAO (LDO) Work?

Lido allows users to stake cryptocurrency tokens like ETH, MATIC without needing to set up nodes or deal with the technical complexities of running staking infrastructure.

Users can simply deposit their tokens into Lido's smart contracts. Behind the scenes, Lido stakes these tokens across various validator nodes on the blockchain to earn staking rewards.

In return, users receive staked tokens like stETH on Ethereum which represent their staked tokens plus accruing rewards. The staked tokens remain liquid - users can trade them or use in DeFi protocols.

Lido distributes staking rewards on a daily basis to staked token holders. Rewards are automatically compounded.

In summary, Lido provides a simple way to earn staking yields on tokens while retaining liquidity, with trust minimized using decentralization and validator incentives.

Tokenomics

What is Lido DAO(LDO) used for:

• Lido has its own native token LDO which has a fixed total supply of 1 billion tokens.
• LDO is used to pay out daily staking rewards to users who deposit tokens to be staked by Lido. A portion of staking fees is allocated to purchase LDO off the open market and distribute as rewards.
• LDO also provides governance rights to token holders. LDO holders can vote on protocol changes, set fees, choose validators, etc.
• Validators running nodes for Lido must stake LDO as collateral. This incentivizes good behavior to avoid slashings and losing staked LDO.
• The APY for staking rewards on Lido varies based on the blockchain. For Ethereum it is currently around 4-5%. Rewards come from the underlying blockchain protocol fees.
• Lido charges a 10% fee on staking rewards to fund protocol development and operations. 90% of rewards go to users.
• As more value gets staked on Lido, more fees are collected which provides revenue to expand services and buyback LDO tokens.

Token Distribution

The total supply of Lido DAO tokens is 1000B

• DAO treasury — 36.32%
• Investors — 22.18%
• Validators and signature holders — 6.5%
• Initial Lido developers — 20%
• Founders and future employees — 15%

Why Is Lido DAO (LDO) Valuable?

• Provides easy and liquid staking - Lido makes earning staking rewards simple without locking up assets or running infrastructure. The staked tokens like stETH remain liquid. This unlocks capital while earning yield.
• Growing demand for staking - As proof of stake networks like Ethereum 2.0 launch, there is increasing demand to stake tokens. Lido captures this growing market.
• Trust minimization - Lido's decentralized network of node operators and protection mechanisms like staked LDO minimize need to trust a centralized party.
• Diversification of staking options - Lido supports staking across multiple chains like Ethereum, Solana, Terra. This diversification reduces risk.
• Staking market leader - Lido has staked over $20B in assets, making it a leading staking provider with strong brand recognition.

Highlights

By Oct 2023, with over $20 billion in assets staked across multiple blockchains like Ethereum, Solana, and Terra.

Having over 3 million ETH staked, it accounts for over 25% of all staked Ether, making it a dominant player in Ethereum 2.0 staking.

Its market leading position provides Lido strong brand awareness, trust, and recognition as a top staking destination, which brings in more users and staked assets.

Lido has raised funding from top tier crypto investors like Andreessen Horowitz, Paradigm, Coinbase Ventures, Pantera, and others.The investor expertise and connections can help advise Lido's strategies and growth.