Lido Finance - Empowering - Liquid Staking for

Powered By GitBook. Lido Finance - Empowering. Lido Staking serves as a pioneering solution in the DeFi sector, revolutionizing the staking landscape by offering a …

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Lido is a decentralized finance (DeFi) project that provides a staking solution for Ethereum (ETH) and other blockchain networks. Lido allows users to stake their ETH and receive staked tokens, called stETH, in return. Staked ETH (stETH) represents a share in the total staked ETH pool, including the rewards earned from staking.

Here's a brief overview of how Lido staking works:

  1. Deposit ETH: Users can deposit their ETH into the Lido smart contract. This is done by interacting with Lido through their platform or directly through smart contract interactions.

  2. Tokenization: Upon deposit, users receive stETH tokens in return. These tokens represent the user's stake in the total pool of staked ETH. Each stETH is meant to be a 1:1 representation of the staked ETH plus accrued staking rewards.

  3. Staking and Validation: Lido aggregates the deposited ETH and stakes it in a chosen set of validators on the Ethereum network. Validators are responsible for processing transactions and creating new blocks.

  4. Rewards and Fees: As the staked ETH generates staking rewards, these rewards are distributed proportionally to stETH holders. However, Lido charges a small fee for its services, typically deducted from the staking rewards.

  5. Redeem: Users can redeem their stETH back to ETH at any time. The redemption process involves burning the stETH tokens, and the corresponding amount of ETH, including any accrued rewards, is sent back to the user's wallet.

Lido aims to provide liquidity and accessibility to staked ETH, allowing users to participate in staking without the need to run their own nodes or worry about the technical aspects of staking.

Keep in mind that the information provided here is based on my knowledge as of January 2022, and there may have been updates or changes to the Lido protocol since then. Always refer to the latest documentation or official sources for the most current information.

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