Lido liquid staking protocol accounts for nearly a third of all staked ETH. But in the parallel market for Solana staking, Lido is a small fish in a big pond.
Struggling to stay afloat in such a competitive market, the team behind Lido on Solana has requested $1.5 million from the Lido DAO to fund its continued operation.
On Monday, September 4, Yuri Mediakov, who heads up a team of blockchain developers that manage Lido on Solana, presented a funding proposal to the Lido DAO.
During that period, P2P significantly boosted the protocol’s total value locked (TVL) by 330% and facilitated new DeFi integrations and partnerships. Regrettably, the firm incurred a $484,000 loss on its Solana-based Lido project in the 2022-2023 fiscal year.
To keep Lido operational, Mediakov has requested $1.5 million from the Lido DAO Treasury. If the DAO votes to refuse the request, Lido on Solana will be retired, following in the footsteps of Lido on Polkadot and Kusama, which proved to be similarly unviable.
With a 32.4% market share, Lido is the largest single Ethereum staker and accounts for nearly four times more staked ETH than its nearest rival—Coinbase.
Moreover, it has pioneered a dramatic shift in Ethereum staking, which has seen the role of centralized exchanges increasingly sidelined by the growing popularity of liquid staking.
At present, centralized exchanges account for just 19.1% of all staked ETH. In contrast, liquid staking makes up 37.5% of the total.
Looking to replicate its liquid staking solution on other blockchains, Lido was launched on Solana in 2021. The next year, equivalent attempts were made to crack the market for staking on Polkadot, Kusama and Polygon.
Without additional community support, only Polygon staking will remain, leaving the project’s multichain goals unfulfilled. What caused this initiative to falter, especially when Lido is thriving on Ethereum?
Lido’s original Ethereum version had a first-mover advantage, simplifying ETH staking while preserving liquidity in 2020. However, as Lido expanded to other chains, competitors had already embraced the concept and advanced it.
For example, Marinade Finance launched the first liquid staking protocol on Solana in August 2021. Building on the staking mechanism pioneered by Lido, Marinade offers users a host of additional features to help them optimize returns on their staked crypto.
By the time Lido made the jump to Solana, Marinade had already secured a healthy lead. Today, the total amount of SOL staked through Marinade is more than twice what is staked with Lido.
Should P2P be granted its funding request, the team promises to “develop and implement new features, making the product more competitive.” But even that might be too little too late.