Lido DAO (LDO): Liquid Staking That Powers Ethereum Yield
Firstly Lido didn’t just make staking easier — it made it usable. Before Lido, staking Ethereum meant locking it up for months or years without access or liquidity. With Lido, users can stake and immediately receive liquid tokens they can use, move, or deploy in DeFi.
At the center of this ecosystem is LDO, the governance token that steers the entire protocol. From validator sets to fee distribution, LDO holders make the calls.
What Is Lido DAO?
Lido DAO is a decentralized staking protocol that lets users stake tokens — primarily ETH, MATIC, SOL, DOT, and KSM — while maintaining access to on-chain liquidity. Instead of locking up assets, users receive liquid staking derivatives like stETH when they stake ETH through Lido.
These derivatives accrue staking rewards automatically. Users can use them in DeFi just like the original token. As a result, Lido created a way to earn staking yield without giving up capital efficiency.
How Lido Works
When users stake ETH through Lido, the protocol efficiently distributes it across selected node operators. In return, they immediately receive stETH, which steadily grows as rewards consistently come in.
Because of this, there’s no need to run a validator or meet staking minimums. Instead, Lido fully handles the backend so users can still easily enjoy liquid staking.
At the same time, Lido currently supports multiple networks:
Ethereum (stETH)
Polygon (stMATIC)
Solana (stSOL)
Polkadot (stDOT)
Kusama (stKSM)
As more chains adopt PoS and staking grows in popularity, Lido continues expanding its integrations.
What LDO Does
Moreover LDO is the governance token of Lido DAO. It gives holders the ability to propose and vote on key decisions that shape the protocol’s direction.
Here’s how LDO drives Lido forward:
Elects and removes node operators
Sets fee parameters and reward distribution
Approves integrations, upgrades, and expansions to other networks
Manages the treasury and development roadmap
Oversees security audits, partnerships, and DAO initiatives
LDO holders don’t just observe the protocol — they control it.
Why Lido Dominates Liquid Staking
Lido became the largest liquid staking protocol for one reason: it solved real problems. Traders, investors, and DAOs needed a way to stake without losing flexibility — and Lido delivered.
Key reasons behind Lido’s dominance include:
Deep liquidity for stETH across DeFi
Secure validator sets vetted by DAO votes
Seamless integration with wallets, protocols, and aggregators
Cross-chain staking support
Transparent DAO operations and consistent upgrades
By giving users both staking rewards and capital flexibility, Lido created a win-win — and the market responded.
Risks and Concerns
Despite its benefits, Lido faces real criticisms. Its dominance over Ethereum staking power has raised concerns about network centralization. Some community members argue that Lido concentrates too much control in too few validators.
Additionally, if smart contracts were compromised or validators acted maliciously, stETH could become unbacked. Governance power also remains heavily skewed toward early LDO holders and insiders, reducing influence for smaller participants.
Still, Lido has responded to criticism with transparency, proposals to cap staking share, and ongoing efforts to decentralize validator selection.
Summary Checklist
Lido allows users to stake assets while keeping them liquid
Users receive stTokens like stETH, which earn rewards and stay usable in DeFi
Lido operates on Ethereum, Polygon, Solana, Polkadot, and Kusama
LDO governs the protocol, validator set, fees, and roadmap
Deep liquidity and seamless integrations fuel Lido’s growth
Critics highlight centralization risks and governance concentration