Staking service for Ethereum Lido declares an extension to layer-two

Lido Finance, a cryptocurrency staking service provider, has announced intentions to increase staked Ether (stETH) support across the Ethereum Layer 2 network ecosystem.

The Lido team announced in a blog post on July 18 that it will first allow Ether staking over bridges to L2s utilizing wrapped stETH (wstETH). Users will soon be able to stake directly on L2s without having to “bridge their assets back” to the Ethereum mainnet in the future.

The team said that it has previously integrated its bridging staking services with Argent and Aztec prior to the announcement in terms of partnered L2s. It also said that the following group of alliances and mergers will be revealed over the next weeks.

The Lido team said that once the fully-fledged L2 staking support is prepared, it would first begin with L2 powerhouses Arbitrum and Optimism before branching out to additional L2s that have enough “demonstrated economic activity.”

The team hailed this change as allowing users to stake ETH with cheaper costs while also obtaining “access to a new suite of DeFi apps to magnify payouts,” given that L2s are intended to minimize the cost of Ethereum transactions.

L2s come in a variety of forms. We anticipate that in the future, both general-purpose Layer 2 networks and networks tailored for particular purposes will account for a significant amount, if not the majority, of economic activity and transaction volume.
According to the report, “Each of these networks will profit from or need staking solutions to sustain their users’ economic activity and make sure that all users of Ethereum ecosystem networks have the option to participate in securing Ethereum.”

On the basis of total stETH value and ranking second overall in terms of total value locked (TVL) on the decentralized finance (DeFi) network, Lido is one of the major providers, with more than 4.2 million ETH staked on the platform, valued at over $6.5 billion.

Lido offers staking payouts on a variety of different assets, including as Polkadot (DOT), Solana (SOL), and Kusama (KSM), although it is largely utilized for its ETH staking services, which produce yearly rates of around 3.9 percent.

Once a customer puts ETH into the platform, a tokenized copy of their deposit is created as stETH, which may be used to access other DeFi protocols’ borrowing or yield services.

The desired ratio of stETH to ETH is 1:1. The peg, however, notably dropped out to 0.95 of 1 ETH in May after the $40 billion Terra ecosystem collapse.

The asset’s depegging carries just a little risk to long-term hodlers and stakers. Anyone who takes on leveraged wagers against the asset, however, risks the serious danger of liquidations. It has been claimed that now-defunct companies like Celsius Network and Three Arrows Capital were prominent stETH users.

The peg is now at the proper ratio, and Lido is providing a 1:1 exchange for ETH and stETH. It seems that depositors may presently obtain back more stETH worth than the amount of ETH they deposit through the decentralized exchange aggregator 1inch, which is also providing a 2.36 percent discount to mint stETH.

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