Popular crypto analyst Altcoin Sherpa names two altcoins he believes will soon soar to values last reached in 2022. The pseudonymous analyst tells his 204,300 followers on the social media platform X that Stacks (STX) could soon soar beyond its recent high of $1.73, a level it hasn’t traded above in nearly two years. “STX: […]
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The investor claimed that 64% of Lido tokens are controlled by just a few venture capital firms, preventing ordinary investors from having any control over decisions.
A Lido holder initiated a class action lawsuit against the governing body for liquid staking protocol Lido, according to a complaint filed in a San Francisco United States District Court on Dec. 17. The lawsuit alleges that the Lido token is an unregistered security and that Lido decentralized autonomous organization (Lido DAO) is liable for plaintiffs’ losses from the token’s price decline.
Lido is a liquid staking protocol that allows users to delegate their Ether (ETH) to a network of validators and earn staking rewards, while also holding a derivative token called “stETH” that can be used in other applications. It is governed by holders of Lido (LDO), which collectively form Lido DAO.
The lawsuit was filed by Andrew Samuels, who resides in Solano County, California, the document states. The defendants are Lido DAO, as well as venture capital firms Paradigm, AH Capital Management, Dragonfly Digital Management, and investment management company Robert Ventures. The document alleges that 64% of Lido tokens “are dedicated to the founders and early investors like [these defendants],” and therefore, “ordinary investors like Plaintiffs are unable to exert any meaningful influence on governance issues.”
The POSA updated its staking principles to say that providers should communicate clearly and not control the amount of liquidity a user must provide.
The Proof of Stake Alliance (POSA), a nonprofit organization that represents firms in the crypto staking industry, published an updated version of its “staking principles” on Nov. 9.
POSA represents 15 different firms in the staking industry, including Alluvial, Ava Labs, Blockdaemon, Coinbase, Credibly Neutral, Figment, Infstones, Kiln, Lido Protocol, Luganodes, Methodic, Obol, Polychain, Paradigm, and Staking Rewards.
The staking principles were first published in 2020. According to the blog post that announced them, they are meant to be “a set of industry-driven solutions” that providers can implement to address the concerns of regulators and encourage responsible practices in the industry.
The old version of the principles says staking providers should not give investment advice, guarantee the amount of staking rewards that can be obtained, or imply that they have control over a protocol in their marketing materials. Instead, they should advertise that their products provide access to a protocol and allow users to enhance security. In addition, the principles state that staking providers should use non-financial terminology such as “staking reward” in their marketing materials instead of financial terms like “interest.”
The Nov. 9 announcement says three new principles will be added. First, staking providers will be encouraged to provide “clear communication […] to ensure users have all the information necessary to make informed decisions.” Second, users should be able to decide how much of their assets they want to stake, as this will promote “user ownership of staked assets." Third, staking providers should have “explicitly delineated responsibilities” and “should not manage or control liquidity for users.”
The crypto staking industry has been criticized by some regulators, who claim it’s a cover for issuing unregistered securities. Kraken’s staking service was shut down by the United States Securities and Exchange Commission on Feb. 9, and the exchange was ordered to pay $30 million in damages for allegedly violating securities laws. However, other staking providers have claimed that their services are not securities. For example, POSA member Coinbase argued that its service is “fundamentally different” from Kraken’s and does not violate securities laws.
LidoDAO took control of the deployment for a wrapped version of its flagship token, stETH, on Base.
Lido’s governing body has approved the deployment of Lido’s Wrapped Staked Ether (wstETH) to Coinbase’s Base network, according to a Nov. 8 announcement. The token is now live and can be traded or used in decentralized finance (DeFi) applications on the Base network.
Lido is on @BuildOnBase
— Lido (@LidoFinance) November 8, 2023
You can now bridge your staked ETH to Base. https://t.co/JmmFeVwNnN pic.twitter.com/R9vN2XGs2g
Lido is a liquid staking protocol that allows users to stake some cryptocurrencies while simultaneously using them in DeFi applications. It does this by issuing a derivative token that can be redeemed for the underlying staked one.
In the case of Ethereum’s native coin, Ether (ETH), the derivative token is called “Lido taked Ether (stETH),” which exists on the Ethereum network. When it is sent to other networks through a bridge, it has to first be wrapped, creating a double derivative token called “Wrapped Staked Ether (wstETH).” Before Nov. 8, no official version of wstETH existed on the Base network.
On Oct. 17, Kyberswap announced that the Beefy Finance team had deployed an unofficial version of wstETH on Base. The two teams offered a proposal for the DAO to take control and accept ownership of this version, so as to officially endorse it.
Related: Lido will ‘wind down’ support for Solana stSOL token
The DAO approved the proposal on Nov. 2 after 597 million votes were cast in favor of it and 255 were cast against it.
“The availability of wstETH on Base marks a major milestone in the journey to scaling wstETH adoption,” LidoDAO contributor Marin Tvrdić stated. “Expanding the protocol’s network of compatible L2s bridges the gap between scalability limitations and the growing demand for decentralized staking to benefit the broader Ethereum ecosystem.”
Although this particular deployment received support from LidoDAO members, not all versions of wstETH have been accepted as official. LayerZero launched a version of wstETH for Avalanche, BNB Chain, and Scroll that drew criticism from multiple protocols for allegedly being “proprietary.” That version is still being debated by the DAO, and no vote has yet been taken on it.
Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router issued a joint statement criticizing the new token.
A new bridged token from cross-chain protocol LayerZero is drawing criticism from nine protocols throughout the Ethereum ecosystem. A joint statement from Connext, Chainsafe, Sygma, LiFi, Socket, Hashi, Across, Celer, and Router on October 27 called the token’s standard “a vendor-locked proprietary standard,” claiming that it limits the freedom of token issuers.
Today, we're announcing a unified call for
— Connext (@ConnextNetwork) October 27, 2023
Open Bridge Standards
alongside @AcrossProtocol @CelerNetwork @ChainSafeth @buildwithsygma @lifiprotocol @SocketDotTech @routerprotocol and @hashialliance pic.twitter.com/D4CLw2lBD1
The protocols claimed in their joint statement that LayerZero’s new token is “a proprietary representation of wstETH to Avalanche, BNB Chain, and Scroll without support from the Lido DAO [decentralized autonomous organization],” which is created by “provider-specific systems […] fundamentally owned by the bridges that implement them.” As a result, it creates “systemic risks for projects that can be tough to quantify,” they stated. The protocols advocated for the use of the xERC-20 token standard for bridging stETH instead of using LayerZero’s new token.
Lido Staked Ether (stETH) is a liquid staking derivative produced when a user deposits Ether (ETH) into the Lido protocol for staking. On October 25, LayerZero launched a bridged version of stETH, called "Wrapped Staked Ether (wstETH)" on BNB Chain, Avalanche, and Scroll. Prior to this launch, stETH was not available on these three networks.
Since any protocol can create a bridged version of a token, LayerZero was able to launch wstETH without needing the approval of Lido’s governing body, LidoDAO. In addition, both BNB Chain and LayerZero announced the token’s launch on X (formerly Twitter), and BNB Chain tagged the Lido development team in its announcement. Members of LidoDAO later claimed that these actions were an attempt to mislead users into believing that the new token had support from the DAO.
On the same day that LayerZero launched wstETH, they proposed that LidoDAO should approve the new token as the official version of stETH on the three new networks. They offered to transfer control of the token’s protocol to LidoDAO, relinquishing LayerZero’s administration of it. In response, some LidoDAO members complained that this move was intended to create a fait accompli to pressure the DAO into passing the proposal when they otherwise wouldn’t have.
Related: LayerZero partners with Immunefi to launch $15M bug bounty
“There appears to have been a coordinated marketing effort between Avalanche, BNB, and LayerZero with a series of twitter posts and slick videos implying that LidoDAO has already officially accepted the OFT standard,” LidoDAO member Hart Lambur posted to the forum, adding “How is this possible when this is just a proposal?”
Some members also argued that the new token could pose security issues. “Layer Zero is a super centralized option that exposes Ethereum’s main protocol to an unprecedented catastrophe,” LidoDAO member Scaloneta claimed, arguing that a hack in the protocol’s verification layer “would imply that infinite wsteth will be minted.”
Cointelegraph reached out to the LayerZero team for comment through Telegram and email, but did not receive a response by the time of publication. In April, LayerZero raised over $120 million to help build more cross-chain functionality into the Web3 ecosystem and partnered with Radix to bring cross-chain functionality to the Radix Babylon network.
The LSDFi sector’s total value locked has grown 5,870% since January as ETH holders seek better yields.
The Ethereum liquid staking derivatives finance (LSDFi) ecosystem has seen a surge in growth this year as Ether (ETH) holders chose to stake rather than liquidate.
Despite ETH withdrawals being enabled with the Ethereum Shapella upgrade in April 2023, an Oct. 16 LSDFi report from crypto data aggregator CoinGecko said the sector grew by 58.7x since January.
By August 2023, LSD protocols accounted for 43.7% of the total 26.4 million ETH staked, with Lido having the lion’s share at almost a third of the total staked market.
The LSDFi sector growth stats show ETH holders would rather re-stake for better yield opportunities than liquidate their assets after withdrawing.
CoinGecko noted that since withdrawals were enabled, the exit queue remained at zero for more than half of the time (55%) and stayed below 10 validators for 77% of the time.
LSDs were introduced to enable smaller ETH holders to participate in staking and unlock liquidity after the Ethereum Beacon Chain launch in December 2020.
Since the beginning of this year, the total value locked across the ten leading LSDFi protocols, not including Lido, surged to over $900 million, according to the report.
The total value locked in LSDFi protocols grew 5,870% since January 2023. Comparatively, the total decentralized finance TVL contracted by around 8% over the same period, according to DefiLlama.
The average yield for LSD protocols since January 2022 has been 4.4% though this will decline as the amount of staked ETH increases.
There are currently 27.6 million ETH staked valued at around $43.4 billion, according to Beaconcha.in.
Related: Liquid staking emerges as a game-changer for crypto investors
Over the past two weeks, Ethereum proponents have cheered on the rise of LSDFi platform Diva which they say is carrying out a “vampire attack” on Lido — enticing users and liquidity from Lido by offering higher incentives.
The Diva vampire attack on Lido is picking up steam
— Evan Van Ness (@evan_van_ness) October 13, 2023
Over 11k Steth deposited into making number go down https://t.co/L6uITU3Bdq pic.twitter.com/vtzVXdKypD
Diva offers token rewards to stakers that lock up their ETH and Lido staked ETH (stETH) for divETH. Since the beginning of October, Diva’s TVL surged 650% to 15,386 stETH valued at around $24 million, according to Divascan.
Magazine: Blockchain detectives — Mt. Gox collapse saw birth of Chainalysis
Unsustainable financials and low fees generated by Lido on Solana were two of the main reasons for the sunsetting.
Decentralized liquid staking protocol Lido Finance has announced a decision to cease operations on the Solana blockchain following a community vote in Lido’s decentralized autonomous organization.
The proposal to sunset Lido on Solana was first put forward by Lido’s peer-to-peer team on Sept. 5, citing unsustainable financials and low fees generated by Lido on Solana. Voting commenced on Sept. 29 and finished a week later on Oct. 6.
“After extensive DAO forum discussion followed by community vote, the sunsetting of the Lido on Solana protocol was approved by Lido token holders and the process will begin shortly,” Lido explained in an Oct. 16 post.
Lido will not be accepting staking requests as of Oct. 16. Voluntary node operator off-boarding will begin on Nov. 17 and Lido users will need to unstake on Solana’s frontend by Feb. 4.
“After this date, unstaking will need to be done using the CLI,” Lido added.
After extensive DAO discussion followed by community vote, the sunsetting of Lido on Solana was approved by LDO holders and will begin shortly.
— Lido (@LidoFinance) October 16, 2023
More information here: https://t.co/MyImL1qpap
The earlier proposal saw Lido seeking $20,000 per month from Lido DAO to support technical maintenance efforts involved with sunsetting operations on Solana over the next five months.
Lido’s P2P team has been working on the Lido on Solana project since acquiring it in March 2022 from Chorus One.
Since the takeover, the P2P team has invested about $700,000 into Lido on Solana and made $220,000 in revenue, resulting in a net loss of $484,000, according to the mediakov, the author of the proposal.
The alternative in the Sept. 5 proposal was to provide more funding to Solana from Lido DAO — however 65 million (92.7%) of the 70.1 million LDO tokens (voted by token holders) were in favor of sunsetting operations on Solana instead, according to open-source voting platform Snapshot.
Lido explained the decision was a difficult but necessary one to make:
“Whilst this decision was difficult in the face of numerous strong relationships across the Solana ecosystem, it was deemed a necessity for the continued success of the broader Lido protocol ecosystem.”
Lido confirmed that staked-Solana (stSOL) token holders will continue to receive network rewards throughout the sunsetting process.
Related: Lido Finance discloses 20 slashing events due to validator config issues
Lido’s staking services are now only supported on Ethereum and Polygon, where $14 billion and $80 million are staked, respectively, according to Lido’s website.
Lido launched on Solana on Sept. 8, 2021, when SOL was priced at $189 — an 87% fall from its current price of $24, according to CoinGecko.
Despite the news, SOL is up 8.6% over the last 24 hours.
Magazine: DeFi Dad, Hall of Flame: Ethereum is ‘woefully undervalued’ but growing more powerful
Network, futures and user data all point toward Ethereum potentially charting a new course.
Ether (ETH) price has been dealing with some strong headwinds and on Sept. 11, the price of the altcoin endured a critical test when it plunged to the $1,530 support level. In the days that followed, Ether managed to stage an impressive recovery, by surging by 6%. This resurgence may signal a pivotal moment, following a month that had seen ETH endure losses of 16%.
Even with the somewhat swift recovery, Ether’s price performance raises questions among investors about whether it has the potential to climb back to $1,850, and ETH derivatives and network activity might hold the key to this puzzle.
Macroeconomic factors have played a significant role in mitigating investor pessimism given that inflation in the United States accelerated for the second consecutive month, reaching 3.7% according to the most recent CPI report. Such data reinforces the belief that the U.S. government's debt will continue to surge, compelling the Treasury to offer higher yields.
Scarce assets are poised to benefit from the inflationary pressure and the expansive monetary policies aimed at bridging the budget deficit. However, the cryptocurrency sector is grappling with its own set of challenges.
There's the looming possibility of Binance exchange facing indictment by the U.S. Department of Justice. Furthermore, Binance.US has found itself entangled in legal battles with the U.S. Securities and Exchange Commission (SEC), leading to layoffs and top executives departing from the company.
Besides the regulatory hurdles faced by cryptocurrencies, the Ethereum network has witnessed a notable decline in its smart contract activity, which is at the core of its original purpose. The network still grapples with persistently high average fees, hovering above the $3 mark.
Over the past 30 days, the top Ethereum dApps have seen an average 26% decrease in the number of active addresses. An exception to this trend is the Lido (LDO) liquid staking project, which saw a 7% increase in its total value locked (TVL) in ETH terms during the same period. It's worth mentioning that Lido's success has been met with criticism due to the project's dominance, accounting for a substantial 72% of all staked ETH.
Vitalik Buterin, co-founder of Ethereum, has acknowledged the need for Ethereum to become more accessible for everyday people to run nodes in order to maintain decentralization in the long term. However, Vitalik does not anticipate a viable solution to this challenge within the next decade. Consequently, investors have legitimate concerns about centralization, including the influence of services like Lido.
A look at derivatives metrics will better explain how Ether’s professional traders are positioned in the current market conditions. Ether monthly futures typically trade at a 5 to 10% annualized premium — a situation known as contango, which is not unique to crypto markets.
The premium for Ether futures hit its lowest point in three weeks, standing at 2.2%, indicating a lack of demand for leveraged long positions. Interestingly, not even the 6% gain following the retest of the $1,530 support level on Sept. 11 managed to push ETH futures into the 5% neutral threshold.
One should look at the options markets to better gauge market sentiment, as the 25% delta skew can confirm whether professional traders are leaning bearish. In short, if traders expect a drop in Bitcoin’s price, the skew metric will rise above 7%, while periods of excitement typically have a -7% skew.
On Sept. 14 the Ether 25% delta skew indicator briefly shifted to a bullish stance. This shift was driven by put (sell) options trading at an 8% discount compared to similar call (buy) options. However, this sentiment waned on Sept. 15, with both call and put options now trading at a similar premium. Essentially, Ether derivatives traders are displaying reduced interest in leverage long positions, despite the successful defense of the $1,530 price level.
On one hand, Ether has potential catalysts, including requests for a spot ETH exchange-traded fund (ETF) and macroeconomic factors driven by inflationary pressure. However, the dwindling use of dApps and ongoing regulatory uncertainties create a fertile ground for FUD. This is likely to continue exerting downward pressure on Ether's price, making a rally to $1,850 in the short to medium term appear unlikely.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
One decentralized finance (DeFi) altcoin is setting the stage for significant growth, according to venture capitalist Arthur Cheong. Cheong, the founder of DeFiance Capital, tells his 149,600 X followers that crypto staking solution Lido (LDO) is undervalued at the moment and has great growth potential. Cheong says that the liquid staking market is seeing massive amounts […]
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Lido (LDO) has achieved “overwhelming dominance” in the Ethereum (ETH) liquid staking sector, according to the crypto analytics firm Glassnode. In a new analysis, Glassnode notes that Lido clocks the highest supply, liquidity, and integration network effects of any liquid staking provider. Lido aims to allow users to stake ETH without locking assets or maintaining […]
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