What is Lido?

Lido is a decentralized staking solution for Ethereum and run by a set of independent, professional validators. A users' deposited ETH is staked with a validator within the Lido validator set. Deposited ETH (+ staking rewards) are represent by "staked ETH" (ERC20) that are minted on a 1:1 basis for every ETH staked via Lido. This allows users to enjoy a certain degree of liquidity for their staked ETH even before withdrawals are enabled on Ethereum. You can learn more about how Lido works here.

Lido Staking Tutorial

Your ETH must be in a wallet or custodial account in order to use our staking services.

Lido Staking Mechanics

Ethereum Protocol Details

Ethereum is the first major smart contract platform that came to life in 2016. After Bitcoin, it is the biggest network i.t.o. market capitalization. Ethereum is powered by the ETH token and home to numerous projects, holds the largest amount of ‘Total-Value-Locked’ (TVL) and was able to attract the biggest developer community so far.

The network is currently undergoing several changes to its’ core technology. Most recently, ‘The Merge’ took place, which changed the protocols consensus layer from utilizing Proof-of-Work to using Proof-of-Stake. Throughout 2022, 2023 & 2024 several other major upgrades will follow that, amongst others, allow the withdrawal of staked ETH (Shanghai upgrade) or introduce sharding. For more about Ethereums’ vision and roadmap, please refer to this blog post by the Ethereum foundation.

FAQs

What is the incentive to stake my ETH?

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Once you have staked ETH, you are contributing to the network's security. In return, you will receive rewards in the form of newly minted ETH. Conversely, if you do not participate in staking, your assets will get diluted over time.

What are the risks associated with staking my ETH?

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On Ethereum, validators are subject to punishment in case of malpractice. This is referred to as "slashing" and can occur in the wake of three events:

  • 'double sign': proposing two different blocks in the same epoch
  • 'surround vote': voting for multiple versions of the chain at the same time
  • 'non-malicious slashing': due to a bug or mistake in the validator setup; low severity if small number of validators is affected (amount slashed increased the more validators are affected)

If you are using the services of a third party provider or a staking pool, you can be subject to a slash. Therefore, we advice you to carefully choose your validator. Please note, that the costs for running a secure and professional validator need to be covered by the commission rate. Hence, it is worthwhile to accept a certain amount of commission in order to secure your profits and minimize the risk of punishment. In addition, we have our own capital on the line in order to fully align our own interest with that of our customers.

Do I maintain control of my ETH after I staked them?

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When staking via Lido, you receive "staked ETH". Your deposited ETH are held and controlled by the LidoDAO, which is managed via a MultiSig. Please note that once you staked ETH, they remain locked and illiquid until token transfers and withdrawals are enabled. This will be the case after the “Shanghai Upgrade”. No specific dates have been announced for the update, but it is expected to take place in the first half of 2023. However, you can still freely use your "staked ETH" (lend, trade etc.).

How much can I earn by delegating my ETH to Staking Facilities?

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Your annual revenue = block rewards + transaction fees - our commission fee

Use our Reward Calculator above to see how may ETH you can earn through your stake.

Block rewards are paid in newly minted ETH and are subject to the annual inflation rate. The change of the annual inflation rate is dependent on the total amount of staked ETH.

Are my rewards automatically sent to me or my validator?

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Rewards automatically accrue on your account. However, they remain locked and illiquid until token transfers and withdrawals are enabled. This will be the case once the “Shanghai Upgrade” took place, which will most likely be in the first half of 2023. Unfortunately, compounding your rewards is currently not possible on a protocol level.

How can I withdraw my rewards?

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Until token transfers and withdrawals are enabled in the wake of the “Shanghai Upgrade”, your rewards and your principal stake remain locked and illiquid. You can however spend, trade, or use your "staked ETH" before that.

If I stake via Lido, can I choose a preferred validator that I want to delegate to?

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When you stake your ETH via Lido, your funds will be distributed between the validators composing the Lido node operator registry. The distribution is optimized to maintain a uniform distribution of ETH between the validators. Hence, you cannot choose a specific validator that you want to delegate to.

Where can I learn more about the LidoDAO?

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You can explore the LidoDAO through this Aragon page and learn more about it in this official blog post.

What is "staked ETH"?

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The ETH you stake via Lido is represented through the "staked ETH" token. "staked ETH" are minted every time someone stakes via Lido and burned whenever "staked ETH" is redeemed for ETH (only possible once Phase 1.5 of Eth2 launches). The token balance of "staked ETH" is pegged 1:1 to the ETH staked via Lido and updated every time staking rewards accrue. "staked ETH" can be used in various DeFi applications such as Curve or Aave and can be traded on exchanges such as Uniswap.

What is LDO?

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LDOs are the governance token for the LidoDAO, which in turn governs a set of liquid staking protocols, decides on key parameters (e.g., fees), and executes protocol upgrades to ensure efficiency and stability. Holding LDO tokens grants voting rights within the LidoDAO.

Are my rewards taxable?

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Unfortunately we cannot answer this question in a general manner as tax regulation differs among legislations. Nevertheless, we advice you to always track your staking operations so you can provide a detailed history of your staking rewards.