On February 25, 2019, the liquid staking platform Lido had the greatest single-day staking inflow of almost 150,000 Ethereum (ETH) valued at an astounding $240 million. Consequently, the total value locked (TVL) on the Lido protocol had a one-day increase of 2.09%. The overall value of items locked on Lido has increased by 9% over the past month.
In the announcement (1) that was made public the previous Saturday, it stated:
“With over 150,000 ETH staked, the Lido protocol has logged its greatest daily stake inflow. When this number was reached, the protocol’s peculiar but essential safety component, the Staking Rate Limit, was activated.
The Staking Rate Limit is a system safety function that enables a dynamic method to respond to huge inflows of stake. This is done to protect the network from potential vulnerabilities.
It also handles the possibility of unintended consequences, such as the diluting of awards, without the necessity of expressly pausing the stake contributions.
The Staking Rate Limit safety mechanism might function by reducing the total staked ETH (stETH) that can be mined all at once based on the deposits made during a sliding window of 24 hours.
This would allow the protocol to be effective. In the future, the protocol will periodically restore this capacity on a block-by-block basis.
According to the statement made by Lido, “this limit impacts all parties who may try to mint stETH, irrespective of approach” (frontend, direct contract call, integration, etc.) If you receive the error message “stETH cannot be mined at this time,” you can either mint a smaller quantity or wait for capacity to be replenished.”
The Creator of Tron Gave ETH to Lido
According to allegations circulating in the market, the founder of Tron, Justin Sun, was responsible for the enormous influx of Ether at Lido Finance. Hildobby, who works at Dragonfly Capital as an analyst and statistical researcher, provided the following explanation:
“Today, [Justin Sun] staked 150K [ether] through [Lido Finance], which accounts for around 0.9% of all the ether that has been staked. Since we started keeping track, this has been the week with the most money wagered on it. This is now the most daily stake inflow that Lido has ever seen, and it also triggered the rate limit function for the first time.”
Decentralized protocols like Lido have reaped the benefits of the United States Securities and Exchange Commission’s (SEC) recent crackdown on centralized players offering crypto-staking services. As a result, the need for protocols such as Lido is likely to increase even higher in the face of governmental action.
The previous month, Lido revealed plans to implement a withdrawals function for Ethereum payments just in time for the Shanghai hard fork expected to occur the following month in March. “The procedure needs to be asynchronous because of the asynchronous character of Ethereum withdrawals,” developers of Lido stated.
In recent years, Lido Dao has also been steadily climbing to the top of the popularity charts. In just one week over the previous month, the value of Lido Dao increased by more than 55%.
Featured Image Source: Bloomberg (2)