What is Lido?
Lido Finance is a liquid staking protocol, first announced in October 2020. In December, Lido raised $2 million in fresh funding to support their mission of allowing users to earn ETH 2.0 staking rewards, without having to set-up and maintain a validator of their own.
At time of writing, there is currently over 18,800 ETH/$23m being staked in Lido's protocol.
Lido uses smart contracts which let you deposit as much, or as little ETH as you would like to stake. In return you receive a token - stETH (see below) - representing your stake. The ETH you deposit into the contract is shared amongst Lido Node operators. Lido Node operators run validators and are compensated by the Lido DAO using a portion of the 10% profit fees collected by the protocol.
The Lido DAO is a Decentralized Autonomous Organization (DAO) which oversees the operations of Lido. The Lido DAO keyholders include some of the biggest names in DeFi. You can read more about the withdrawal key generation process here.
Lido DAO governance is done through LDO, which is a governance token that was issued to founding members of the Lido DAO, as well as airdropped to those who staked or held stETH before December 28th 2020.
You can learn more about Lido DAO and the LDO token on Lido's blog, here.
What is stETH?
The stETH token is a tokenized version of staked ether. When a user sends ether into the Lido liquid staking smart contract, the user receives the corresponding amount of stETH tokens. The stETH token represents Lido user’s deposits and the corresponding staking rewards and slashing penalties.
You can trade stETH on Decentralized Exchanges (such as through our native Paraswap integration), transfer it, or use for DeFi. Rebaseable tokens are not fully supported for pooling by - for instance, Uniswap - which can lead to a negative impact on your stETH token balance.
We expect a number of DeFi applications for stETH to emerge in the coming weeks and months.
How to stake ETH in Argent, and receive stETH
It couldn't be easier to stake ETH with Lido in Argent:
First, go to the 'Investment' tab
Select 'Ethereum 2.0 Staking'
Tap 'Lido Staked ETH'
Tap 'Buy Investment'
Enter the amount of ETH you would like to invest
You'll then receive stETH tokens, representing your stake in Ethereum 2.0.
The percentage return on staked ETH will depend on the total staked ETH in the network. APR decreases when the total amount of staked ETH is increased.
Your stETH balance will update once per day to reflect any changes.
Are there any fees?
The Lido system applies a 10% profit fee, which is distributed between node operators, the Lido DAO, and an insurance fund. More details are provided in the Lido Primer documentation. Argent does not take a fee for staking through Lido.
Can I withdraw my stETH once I've staked ETH?
Native withdrawals from Lido will be enabled after Phase 2 of the ETH 2.0 rollout. However you can always trade your stETH back into ETH from the 'Invest' tab. You will receive ETH from the Curve stETH-ETH pool, so you may receive a bit less ETH than your stETH. You can check the current rate on curve.fi.
Why should I use the investment tab to stake ETH, rather than buying stETH through a DEX?
Staking this way you'll always receive 1:1 stETH for your ETH deposit. The gas should also be lower this way, and you don't have to worry about slippage. What's more, by depositing directly you are supporting the Ethereum network by increasing the total amount of staked ETH.
What are the risks?
Lido have identified the following possible risks of using liquid staking protocols:
Other Risks include Eth 2.0 Technical and Adoption risk, DAO key management risk (addressed by using a multi-signature threshold scheme), Validator Slashing risk, and stETH price risk.
You can read more about this, along with the measures taken to address them, at Lido's FAQ page here.