Lido

Lido is the largest liquid staking protocol on Ethereum. It lets anyone stake ETH without running a validator or locking 32 ETH, and gives back stETH, a token that earns staking rewards while remaining usable in DeFi. Launched in December 2020 and governed by the Lido DAO through the LDO token, Lido released its modular V3 in January 2026. This page explains how Lido liquid staking works, what LDO is for, how decisions are made and which risks stETH holders carry.

What Lido does

Ethereum secures itself through proof of stake: validators lock ETH and earn rewards for proposing and attesting blocks. Running a validator takes 32 ETH, technical skills and a machine online at all times. Lido pools deposits of any size, hands them to a set of professional and community node operators, and issues stETH one-for-one. Your stETH balance grows daily as rewards arrive, minus a 10% fee on rewards shared between node operators and the DAO treasury according to each module.

How Lido works

stETH can be held, traded or used as collateral in lending markets. A wrapped version, wstETH, keeps a fixed balance and grows in value instead, which suits DeFi protocols and other networks: wstETH is bridged to Arbitrum, Optimism, Base, Polygon and several other chains. Since May 2023 users can also redeem stETH for ETH directly through the protocol’s withdrawal queue, which usually takes from a few days to a few weeks depending on demand.

Operators are chosen through modules. The Curated module groups professional operators approved by the DAO; the Community Staking Module (CSM), live since October 2024 and permissionless since January 2025, lets smaller operators join with a bond. Lido V3, live since 30 January 2026, adds stVaults: isolated vaults where institutions or operators set their own terms while minting stETH.

The LDO token

LDO has a fixed supply of 1 billion, about 83% of which circulates as of October 2026. Its main use is governance over the staking protocol: LDO holders vote on fees, operators, upgrades and the treasury. Since 14 August 2026, an automated buyback (NEST) uses half of protocol revenue above a $40 million yearly baseline to buy LDO, capped at $10 million a year; the tokens go to the treasury and are not burned.

Governance

The Lido DAO votes onchain through Aragon, with Snapshot polls for signalling and Easy Track for routine payments. Since 30 June 2025, Dual Governance gives stETH holders a veto mechanism: if enough of them signal opposition, contested changes are delayed by up to 45 days, giving them time to withdraw. In December 2025 the DAO approved a $60 million budget for 2026 focused on staking products, core upgrades and new verticals.

History and key dates

• December 2020: Lido launches on Ethereum after a $2 million seed round.
• May 2021: $73 million LDO purchase led by Paradigm.
• June 2022: stETH trades at a discount of up to about 7% during the Celsius and Three Arrows crisis.
• August 2022: DAO sells 10 million LDO to Dragonfly with a one-year lock-up.
• May 2023: Lido V2 enables withdrawals.
• December 2024: Lido on Polygon stops accepting stakes, after the Solana version closed earlier.
• June 2025: Dual Governance goes live.
• January 2026: Lido V3 and stVaults launch.

Security and risks

Lido’s contracts have been audited by firms such as Certora, Statemind, Hexens, MixBytes, OpenZeppelin, Ackee and Consensys Diligence, and it runs a bug bounty on Immunefi. No exploit of the core contracts has been reported. The risks to understand:

• Slashing: a misbehaving validator loses part of its stake, which affects all stETH holders.
• Depeg: on markets, stETH can trade below ETH when many holders want out at once, as in June 2022.
• Smart contract and oracle risk: rewards and withdrawals depend on contracts and on an oracle committee that reports validator balances.
• Concentration: Lido controls a large share of staked ETH, a recurring debate for Ethereum decentralization.
• Regulation: a US SEC staff statement of 5 August 2025 says liquid staking tokens are not securities, but it is not a rule.

Our risk score is 2 out of 5: a long record and deep audits, offset by slashing, depeg and concentration risks.

How to use Lido safely

• Stake only from lido.fi; fake staking sites and airdrop claims are common.
• Use the official withdrawal queue rather than selling stETH at a discount when markets are stressed.
• Be careful when looping stETH as collateral: a temporary depeg can trigger liquidations.
• Read our DeFi guide before stacking several protocols on top of stETH.