Lido Review: Key Features in 2024

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Ramsha Naushad
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Welcome to our [current-year] Lido review, where I will explain Lido crypto staking. Be it experienced or a newbie in DeFi, I've got you covered. 

In this review, you will read about staking with Lido, Lido fees, and its security, all while pondering the question, "Is Lido decentralized?" 

So, fasten your seatbelts, and let's explore the exciting realm of Lido Finance. 

DisclaimerThe information provided on this website is for informational purposes only and should not be considered as financial, investment, or legal advice. Cryptocurrency investments are volatile and high-risk in nature. Consult with a qualified financial advisor and/or tax professional before making any investment decisions. We are not responsible for any loss incurred due to the use of information on this website. Do your own research and exercise caution. Don’t invest unless you’re prepared to lose all the money you invest.

Key Takeaways

 

  • With Lido, you can stake on multiple supported networks
  • Lido's simple process and user-friendly platform cater to both new and experienced DeFi users
  • Code reviews and a decentralized autonomous organization (DAO) enhance asset safety
  • Lido's blog and documentation help you stay of updates and leverage educational resources
  • Factor in the 10% staking rewards fee when planning your investment strategy to optimize returns
  • If residing in the U.S., note Lido's non-acceptance of U.S. users and explore alternative platforms

 

Pros and Cons

Here are main pros and cons of Lido:
 

Pros and Cons of Lido
Pros Cons
Decentralized staking for assets like ETH with earned rewards Smart contract risks inherent in decentralized protocols
Liquidity provision in DeFi protocols using staked assets Staking rewards influenced by market conditions
stETH tokens enable seamless trading and transfers Limited range of supported staking assets compared to other platforms
Lowered minimum staking threshold for broader participation Regulatory uncertainties affecting the decentralized finance space
Governance participation for LIDO token holders in the Lido DAO Technical complexity may be a barrier for some users interacting with smart contracts
Non-custodial operation reduces centralized custody risks  

 

Exploring Lido: Brief Overview 

Lido Finance is a decentralized liquid staking protocol. The company was founded in 2020 and is based in George Town, Cayman Islands.

It offers users the ability to stake assets such as Ethereum, Solana, Polygon, Polkadot, and Kusama. You can stake assets as collateral while earning staking rewards and interest from lending. 

The platform also features a native token called LDO. We will learn more about it, but let's first understand the basic concept of liquid staking.
 

What is Liquid Staking?

Liquid staking is a concept that allows users to stake their cryptocurrencies while maintaining the flexibility to use those staked assets as collateral for various DeFi activities

In traditional staking, locked assets cannot be used elsewhere. But with liquid staking, assets can be unlocked and utilized, increasing their potential yield.
 

Lido: Background Information

Lido was founded in 2020 by Konstantin Lomashuk, Vasiliy Shapovalov and Jordan Fish. Lido Finance was founded to address the limitations of traditional staking. It introduced liquid staking options.

Lido is operated by a decentralized autonomous organization (DAO). It comprises members such as Libertus Capital, Semantic VC, StakeFish, and Bitscale Capital. Some angel investors include Kain Warwick and Stani Kulechov.

Lido Finance is one of the largest staking providers globally. It secures billions of dollars in staked assets.

The platform has earned a reputation for its liquid staking solutions. The competitive Annual Percentage Rates (APRs) reach up to 12.9%. It has established a DAO, issued derivative tokens, and uses the native utility token, LDO, for governance and fee management. 
 

Lido: Features and Services

Lido Finance offers a wide array of services tailored for those looking to stake crypto. Here's a comprehensive look at what Lido has to offer.
 

Lido staking and supported networks

Lido Finance allows users to stake assets on various networks. It includes Ethereum, Solana, Polygon, Polkadot, and Kusama. It provides a diversified range of options to cater to different user preferences.

Lido offers an easy staking process where users can stake to earn daily rewards. There's no minimum requirement for the number of tokens that users can stake. It provides flexibility to all.
 

Layout and ease of use

Lido's platform is designed with user-friendliness in mind. It is an accessible choice even for those new to DeFi. Its intuitive design simplifies the process of staking and managing assets on the platform. Still, you may need some tutorials to understand the intricacies.

Lido users can unlock the full potential of their assets. It can be done by using them as collateral for various DeFi activities lending and yield farming. This enhances the yield they receive, allowing for more significant returns.
 

Native Token (LDO)

Lido has its native token, LDO, which is available on multiple exchanges. Users can trade LDO on many platforms and explore its utility. You can trade them on:

  • SushiSwap
  • Uniswap
  • Hoo
  • 1inch
  • Hotbit
  • DeversiFi
  • Bilaxy

Supported wallets

Lido doesn't provide its own wallet. It integrates with popular DeFi wallets like TrustWallet and MetaMask. Users can manage their assets using these trusted wallets, adding a layer of convenience.
 

Semi-Custodial Staking Service

Lido offers a semi-custodial staking pool service. It distributes users' Ethereum across its validator nodes. While doing so, ETH serves as a representation of a user's staked ETH. You have the flexibility to exchange it at any time. 

Lido extends its staking services to several blockchains. It includes the post-Ethereum Merge consensus layer, Polygon, Kusama, Solana, and Polkadot. It allows you to engage in staking on multiple layer-1 PoS blockchains. 
 

Lido Pool

The Lido Pool is a crucial feature offered by Lido Finance. It allows users to participate in Ethereum 2.0 staking. Users can deposit their ETH into the Lido Pool. 

It aggregates these deposits and sends them to Ethereum 2.0 staking validators. In return, users receive stETH (staked Ether) tokens. It represents their stake in the Ethereum 2.0 network. 

These stETH tokens are liquid and can be easily traded or transferred. The Lido Pool enables users to benefit from staking rewards without the need to run their own validator node.
 

Lido Bond

The Lido Bond is another integral component of Lido's services. It represents the interest-bearing token for stakers in the Lido ecosystem. 

Stakers can lock their stETH tokens into the Lido Bond. The Lido Bond essentially acts as a savings account, enabling users to accrue interest on top of their staking rewards. 
 

Quality Audits

Lido's smart contracts undergo thorough auditing by reputable firms. Some of them are Quantstamp and Sigma Prime. These audits ensure the platform's security and reliability.
 

User Experience

Let’s explore user experience on the Lido platform.
 

Functionality

Lido offers a seamless user experience with smooth functionality. The platform operates efficiently. It ensures users experience no noticeable issues or lags while staking cryptocurrencies.

Stakers can confidently navigate the platform and execute transactions. You will find it easy to manage assets without encountering major disruptions or interruptions.
 

Registration process

Lido's registration process is user-friendly and straightforward. Users can initiate the staking process with ease. There are no complex or time-consuming registration steps.

The platform does not impose extensive Anti-Money Laundering (AML) procedures during registration. It makes it convenient for users to begin staking promptly.

It has a referral option. The Lido referral program gives the opportunity to spread the benefits of staking and earn LDO tokens. 

To be eligible for the program, participants must demonstrate a potential to drive at least 2,500 ETH to Lido over a 12 to 24-month period. Furthermore, they must be willing to promote Lido alongside alternative liquid staking tokens.
 

Educational resources available

For educational support, Lido provides users with an array of resources. You will find an informative "About" section on its official website. It explains the platform's mission and offerings. Additionally, users can access the latest insights and updates through the platform's "Blog."

Lido has a comprehensive "FAQ" section on its website. It addresses common user inquiries, providing clear answers to assist users in navigating.

The platform also offers a "Help Center" for users seeking additional guidance. This valuable resource acts as a central hub for users to find help when needed.

Extensive documentation is available on Lido's website. It offers in-depth insights and guides on how to maximize the benefits of the platform. All are aimed at facilitating users in achieving their staking goals with confidence.
 

Is Lido Safe

Lido Finance prioritizes user safety with a range of key security features. These include:
 

Continuous code reviews

Lido Finance conducts regular code reviews to maintain a secure and dependable framework. These reviews promote transparency and proactively identify and address potential vulnerabilities.
 

Decentralized autonomous organization (DAO)

Lido Finance employs a DAO for governance, emphasizing its dedication to user security. This approach enables collective and transparent decision-making.
 

Multi-validator system

Conventional practices involve staking with a single validator. Lido employs a multi-validator system that decentralizes risk. With over 260,000 validators, Lido spreads risk efficiently.
 

Security audits

As mentioned, Lido Finance has undergone comprehensive security audits. It is conducted by reputable firms like Quantstamp, Sigma Prime, and MixBytes. These audits ensure that the platform complies with rigorous safety protocols.

The security of Lido DAO (LDO) and staked-Ether (stETH) tokens has been challenged recently. Reports say it was due to a known security flaw in LDO's token contract. Lido Finance swiftly responded to these concerns. 

It confirmed that LDO and stETH funds remained secure. The flaw allowed "fake deposit" attacks. But no on-chain evidence was provided to support any successful exploit.

Lido also acknowledges several risks involved in staking ETH using liquid staking protocols:

  1. Smart contract security: There is a potential risk of smart contract vulnerabilities or bugs. Lido's open-sourced code is hence audited and supported by an extensive bug bounty program
  2. ETH - technical risk: Lido operates on experimental technology. The potential vulnerabilities in ETH could impact stETH
  3. ETH - adoption risk: The value of stETH is tied to ETH adoption. It is susceptible to fluctuations if ETH doesn't meet expected adoption levels
  4. Slashing risk: ETH validators face penalties
  5. stETH price risk: Users face the risk of stETH price variations. It is due to withdrawal restrictions on Lido

Despite these risks, Lido Finance remains proactive in managing and mitigating them. It is committed to the security and safety of its users. It is transparent about its potential vulnerabilities in its blogs.
 

 

Lido Fees

Lido Finance is transparent about its fee policy. Let me briefly explain it to you:
 

Staking rewards fee

Lido charges a 10% fee on your staking rewards. This fee is divided between the node operators and the protocol's treasury. Staking reward fees are not unusual in the world of staking services. It's important to be aware of this 10% deduction from your earnings.
 

Lido DAO Token (LDO) withdrawal fee

You can easily transfer or withdraw Lido DAO Tokens (LDO) to another wallet or exchange. A withdrawal fee may apply for the same. 

  • This fee is typically charged by the platform or wallet used for the transfer. Its primary purpose is to incentivize network nodes (miners) to process and validate the transaction. The withdrawal fee is usually expressed in satoshis per byte (sat/b) or gas. It is subject to current network conditions. 
  • It's important to note that transaction speed is often determined by the fee you choose to pay. Miners prioritize transactions with higher fees for faster processing.

 

Tracking withdrawals

You can track the status of your Lido DAO Token (LDO) withdrawal. Just use the provided transaction ID or hash. This information can be found in the transaction history section of your wallet. To monitor the progress of your transaction input the transaction ID into a blockchain explorer. It will display the current status of your withdrawal.

Lido Finance maintains a clear and concise fee structure. It ensures that users know the costs associated with staking and withdrawal activities.
 

Fee Type Description
Staking Rewards Fee  Lido charges a 10% fee on your staking rewards, which is divided between node operators and the protocol's treasury. 
Lido DAO Token (LDO) Withdrawal Fee The fee is typically charged by the platform or wallet used for the transfer, and it's expressed in satoshis per byte (sat/b) or gas. The amount may vary depending on current network conditions. 
Tracking Withdrawals Users can track the status of their Lido DAO Token (LDO) withdrawal using the provided transaction ID or hash. 

  Types of fees

Tax considerations

The earnings you receive from staking with Lido may be subject to taxes. The tax regulations you encounter will depend on your location. 

Lido is a decentralized finance platform. It may not provide the tax forms required for reporting your staking income. I suggest you ensure compliance with local tax regulations. Consult with relevant tax authorities if necessary.
 

How to Stake ETH with Lido

Staking your Ethereum (ETH) with Lido is a simple process. Follow these simple steps to get started:
 

Step 1: Visit the official Lido staking portal 

Open your web browser and navigate to the official Lido staking portal. It's important to ensure you're on the correct website. The official URL is stake.lido.fi. Be cautious to double-check the URL to avoid any potential security risks.
 

Step 2: Connect your ETH wallet 

Once you're on the Lido staking portal, locate and click on the "Connect Wallet" button. Lido supports various Ethereum wallets, including popular options like Metamask, MyEtherWallet, and more. Select your preferred wallet to establish a secure connection. 

Upon successful connection, you will be able to view your ETH balance within the Lido platform.
 

Step 3: Choose your staking amount 

Lido allows you the flexibility to stake any amount of ETH, including even the smallest quantities. Simply enter the amount of ETH you wish to stake and click the "Stake" button. 

Keep in mind that gas fees may apply to the transaction. In some cases, staking a larger amount of ETH can be more cost-efficient. However, the decision ultimately depends on your preferences and objectives.
 

Step 4: Confirm the transaction 

After clicking the "Stake" button, your wallet will prompt you with a transaction confirmation. Verify the details of the transaction and confirm it to proceed. This action initiates the staking process.
 

Step 5: Receive stETH rewards 

Upon confirmation, your wallet will receive stETH tokens, which represent your staked ETH on the Ethereum mainnet. Your stETH balance will automatically grow as you earn daily staking rewards. 
 

How does Lido work?

Here is a brief explanation of Lido’s functions. Lido protocols batch user tokens to stake with validators. There's also routing to staking contracts. These tokens are then routed to network staking contracts. Minting stTokens. Users receive stTokens corresponding to their staked amount, representing their stake.

  • Users start earning staking rewards as their assets contribute to the network.
  • When users decide to unstake, they burn the stToken to begin the withdrawal process.

The withdrawal process follows network-specific rules to return the stake and rewards to the user.
 

Supported Countries

Lido Finance is a globally accessible platform, available to users around the world in the following areas:

  • North America
  • South America
  • Europe
  • Asia
  • Africa
  • Australia
  • Middle East

Use it for staking and liquid staking across various supported networks (Ethereum, Solana, Polygon, Kusama, and Polkadot.)
 

Deposit and Withdrawal Methods

Lido Finance offers a straightforward approach to depositing and withdrawing funds. Here's what you need to know about these processes.
 

Deposit methods

Lido supports deposits in various cryptos, depending on the network you stake with. These include Ethereum, Solana, Polygon, Kusama, and Polkadot.

The process of depositing your assets involves connecting your wallet to the Lido platform. Then select the amount of tokens you wish to stake. The minimal amount you can stake is not restricted, providing flexibility for users.
 

Withdrawal methods

You can withdraw your staked assets. Users have the option to exchange their staked tokens for the original tokens at any time through the Lido platform.

This withdrawal process is generally hassle-free. It grants users access to their assets as needed.
 

Fees

Lido charges a 10% fee on the staking rewards earned by users. This fee is divided between the node operators and the protocol's treasury.
 

Accepted currencies

The accepted currencies for staking on Lido depend on the network you choose. Ethereum, Solana, Polygon, Kusama, and Polkadot are among the primary options available.
 

Limitations

Lido aims to provide ease of use and flexibility for users. It is essential to consider the associated risks and limitations. These risks include potential smart contract vulnerabilities, staked ETH price fluctuations, and risks related to slashing penalties for validators. 
 
 

Customer Support and Feedback

Lido Finance is dedicated to ensuring a positive user experience. It offers several avenues for customer support and assistance. Here's an overview of their support channels and the feedback they've received.

Lido provides users with various channels to seek assistance. Some of them are mentioned below.

  1. Help center: Lido's Help Center is a valuable resource. It addresses a wide range of user queries and concerns. Here, you can find answers to many common questions and find guidance on using the platform
  2. FAQs: The platform offers a comprehensive FAQ section. It serves as a go-to source for addressing frequently asked questions. Users can navigate through these FAQs to find solutions to their inquiries
  3. Blog: Lido maintains an active blog where users can access detailed articles. Most are related to the platform, updates, and relevant information. It's an excellent resource for staying informed about the latest developments
  4. Documentation: Lido provides documentation that offers insights into various aspects of its services. It is aimed at enhancing users' understanding of the platform
  5. Direct email support: For any specific or personalized inquiries, users have the option to reach out via email. Write to them directly at [email protected]

 

User Feedback

User feedback on Lido's customer support has been generally positive. The platform's commitment to providing resources and documentation has been appreciated by users. 

It empowers them to find answers to their questions independently. However, the most common feedback and user experiences tend to fall into the following categories:
 

Positive feedback

  • Users have found the Help Center and FAQs to be comprehensive and effective
  • The blog and documentation resources are appreciated for keeping users informed
  • Users have reported timely and helpful responses when reaching out via email

 

Negative feedback

  • The platform's self-help resources are extensive. Some users have reported difficulty in navigating through them, leading to occasional frustration
  • A few users have expressed a desire for additional customer support channels beyond email. Such as live chat or direct messaging options for more immediate assistance

 

Mobile App

Lido Finance does not currently offer a dedicated mobile app for its services. Users access through their web interface on mobile devices or computers. Lido's website is designed to be responsive and accessible on a variety of devices. It makes sure that users can manage their staking and assets while on the go. 

Some DeFi platforms may opt for a web-based interface accessible across different devices. Lido Finance follows this approach, prioritizing accessibility and flexibility for its users. 
 

Lido Review: Final Thoughts

Lido Finance hits all the right notes with its top-notch staking services. It boasts a user-friendly interface, competitive fees, and a generous referral rewards program. The platform is committed to providing liquidity to staked ETH and is backed by industry leaders. 

It is essential to acknowledge the inherent staking-related risks. Lido is actively working towards minimizing them and striving for a risk-free experience. 
 

 

 

Frequently Asked Questions

What is Lido Finance?

Lido Finance is a decentralized finance (DeFi) protocol that enables users to earn yield on their digital assets by staking and lending. It is a protocol built on the Ethereum blockchain that provides users with a secure and automated way to earn yield on their digital assets.

How does Lido Finance work?

It is an open-source platform that enables users to lend and borrow digital assets, earn interest on their deposits, and participate in yield farming. The Lido platform is composed of two main components: the Lido Pool and the Lido Bond. 

Is Lido Safe?

Yes, staking ETH with Lido is considered safe. It is notable for being the largest liquid staking platform in terms of Total Value Locked (TVL), boasting an impressive sum of over $15 billion.

What are the risks of staking with Lido?

Lido staking risk is deemed low. An important risk to be aware of when staking ETH is the possibility of losing your staked assets due to slashing.

Can I unstake my ETH on Lido?

Yes. Since the launch of Lido v2 on May 16, 2023, users now have the option to withdraw/unstake their staked ETH (stETH) through the Lido website. 

How does Lido finance support staking for Ethereum 2.0?

Lido finance supports Ethereum 2.0 staking by allowing users to deposit ETH, converting it into stETH tokens through a smart contract. Lido aggregates these tokens and runs validators on behalf of users, simplifying the staking process. Users earn rewards in the form of additional stETH tokens without managing the technical aspects of running a validator node.

 

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We are CryptoManiaks.  Collectively, we have over 25 years of experience in the crypto world and are all passionate about guiding people through the complex world of crypto investing.

Written by

Ramsha Naushad

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