The prominent Ethereum and Terra staking provider Lido is exploring opportunities to broaden its services to other proof-of-stake blockchains, beginning with the emerging Layer 1 platform Solana.
A formal proposal submitted on Lido’s governance forum by Chorus One, a major infrastructure provider in the crypto space, outlines a strategy to introduce liquid staking on the Solana network. The initiative would involve issuing a staking derivative token—tentatively named stSOL—which would allow users to earn staking rewards while maintaining liquidity.
Proposal Overview and Incentive Structure
Chorus One has put forward a detailed plan requesting funding from the Lido Ecosystem Grants Organization (LEGO), a grant initiative launched by Lido in March to support ecosystem development. The proposal includes a compensation model consisting of:
- 2 million vested LDO tokens
- A 20% share of the protocol fees generated by the Solana staking service
These fees would be directed to Lido’s treasury, supporting further development and an insurance fund.
Ambitious milestones are tied to the vesting schedule. One million LDO tokens would begin vesting once Lido achieves 2.5% of the total staked SOL supply. Full vesting of the remaining tokens is contingent upon Lido securing 25% of all staked SOL. Chorus One claims to already be one of the largest SOL stakers, currently holding around $600 million in staked SOL tokens.
Why Solana? Strategic Expansion and Benefits
A representative from Lido highlighted the potential benefits of expanding to Solana, stating that such a move could significantly boost protocol revenue. Similar to its existing Ethereum service, Lido would apply a 10% fee on staking rewards. This fee would be distributed between node operators and the Lido DAO Treasury, which could allocate funds to initiatives like an insurance fund or further grants.
Lido’s core mission remains focused on Ethereum—ensuring it stays "simple, secure, and decentralized." However, the team is open to extending this philosophy to other compatible proof-of-stake networks. Solana, with its high throughput and growing ecosystem, represents a strategic starting point for multi-chain expansion.
Lido’s Current Market Position
Lido is already a major player in the staking landscape. According to its official website, the service currently holds:
- 256,964 staked ETH
- Valued at over $7 billion
- Spread across nearly 5,000 addresses
- Offering an annual yield of 7.1%
It ranks as the third-largest staking pool for Ethereum. Expectations are that staking rewards, expressed as APY, will increase significantly after the full launch of Ethereum 2.0.
Recent LDO Token Performance
The native governance token of Lido, LDO, has recently experienced substantial price appreciation. In the past 24 hours, the token surged by 54%, reaching $2.90. Over the week, it gained 216%. This bullish movement may be partly driven by another recent governance proposal concerning the sale of a portion of the LDO supply to several well-known venture capital firms, including:
- Delphi Digital
- Digital Currency Group
- Three Arrows Capital
- Alameda Research
Such investments often signal strong institutional confidence and can contribute to positive market sentiment.
Frequently Asked Questions
What is liquid staking?
Liquid staking allows users to stake their tokens while receiving a derivative token in return. This derivative can be used in other DeFi applications, providing liquidity and enabling additional yield opportunities, all while still earning staking rewards.
How does Lido generate revenue?
Lido applies a 10% fee on the staking rewards earned by users. This fee is split between node operators, who maintain the infrastructure, and the Lido DAO Treasury, which funds development, grants, and safety mechanisms like an insurance fund.
Why is Lido expanding to Solana?
Expanding to Solana allows Lido to tap into a growing ecosystem and diversify its service offerings. It increases protocol revenue potential and aligns with Lido’s goal of providing simple and secure staking across multiple proof-of-stake blockchains. For those interested in the technical execution, you can explore more strategies behind multi-chain staking.
What are the risks involved with liquid staking?
Primary risks include smart contract vulnerabilities, depegging of the staked asset derivative, and potential slashing penalties imposed on validators. Lido mitigates some of these risks through its insurance fund and careful selection of node operators.
Can Lido’s stSOL be used in DeFi?
Yes, similar to stETH on Ethereum, stSOL would be designed to be composable within the Solana DeFi ecosystem. Holders could use it as collateral, provide liquidity in pools, or integrate it into other yield-generating strategies.
How does governance work for Lido’s expansion?
All major decisions, including expansion to new blockchains, are made through a decentralized autonomous organization (DAO). LDO token holders submit and vote on proposals that dictate the protocol’s development, treasury management, and partnership strategies. To get advanced methods on participating in governance, the community is encouraged to engage in forum discussions and on-chain voting.
Expanding to Solana represents a significant strategic move for Lido, potentially increasing its user base, revenue, and influence within the multi-chain staking ecosystem. By introducing liquid staking to Solana, Lido can offer users more flexibility and opportunities while strengthening its position as a leading staking service provider.