Ethereum investment service Lido promises layer-two expansion
Lido Finance, a supplier of crypto staking services, has announced intentions to extend support for staked Ether (stETH) throughout the ecosystem of Ethereum Layer two (L2) networks.
In a July 18 blog post, the Lido team announced that it would first allow Ether staking through bridges to L2s with wrapped stETH (wstETH). In the future, users will be able to stake directly on the L2s “without needing to bridge their assets back” to the Ethereum mainnet.
In terms of partnered L2s, the team indicated that it had already integrated its bridging staking services with Argent and Aztec before the announcement. In addition, the next round of collaborations and integrations will be presented in the coming weeks.
Once complete L2 staking support is available, the Lido team will begin with L2 heavyweights Arbitrum and Optimism before extending to other L2s with significant “economic activity.”
“There are several varieties of L2s. We anticipate that a significant fraction (if not the majority) of economic activity and transaction volume will shift to general-use and purpose-specific Layer 2 networks.
Lido is one of the biggest suppliers in terms of total stETH value and the second largest in terms of total value locked (TVL) on the decentralised finance (DeFi) network, according to the company’s website.
Lido offers stake rewards on a variety of different assets, including Solana (SOL), Kusama (KSM), and Polkadot (DOT), but is mainly used for its ETH staking services, which give around 3.9 percent yearly payouts.
Once a customer puts ETH into the platform, a tokenized version of their deposit is created as stETH, which may be utilised in other DeFi protocols’ borrowing or yield services.
stETH is meant to have a 1:1 ratio with ETH. In May, however, in the wake of the $40 billion Terra ecosystem collapse, the peg infamously plummeted to 0.95 ETH for 1 ETH.