Liquidity for Staked Assets
Review
Pros & Cons
Key Benefits
Lido provides stETH, a liquid representation of staked assets. This allows users to trade, lend, or use them in DeFi while still earning staking rewards.
Low Entry Barrier
Users can stake any amount of tokens. This is different to traditional staking solutions requiring high minimum deposits (e.g., 32 ETH for Ethereum).
Simplified Staking Process
You don’t need any technical expertise or hardware setup for staking via Lido. This makes staking accessible to a wider audience.
Maximized Returns
Users earn staking rewards while leveraging stETH in DeFi to generate additional income streams.
Enhanced Security
Lido employs audited smart contracts, validator diversification, and non-custodial staking to reduce risks. This means that not a single node operator, has more than 1% of the stETH under him.
Red Flags
Protocol Fee
Lido charges a 10% fee on staking rewards, which may reduce overall returns compared to solo staking.
Dependency on Validators
Poor performance or misbehavior by validators can impact user rewards and pose risks.
Exposure to Smart Contract Risks
Like all DeFi protocols, Lido is exposed to vulnerabilities in its smart contracts, which could result in potential fund losses.
Centralization Concerns
If Lido controls a large percentage of staked ETH, it could have outsized influence over the Ethereum network's operation and governance decisions - even though Lido itself is governed by a DAO.