What Is Lido DAO (LDO)? How It Works & Where To Buy It?

As Ethereum 2.0 approaches, many people have been eagerly awaiting its arrival. Some ETH has been staked to the Beacon Chain, however, that ETH will not be released until ETH 2.0 is released.

Lido has an innovative solution for the interim – where users can essentially use their ETH (as well as other assets) even though it’s being staked.

The Lido DAO Token (LDO) is the governance token of the staking protocol and is currently the 81st largest cryptocurrency in the world.

 

How Lido DAO (LDO) Works

Users have the ability to stake ETH and other tokens in Lido, after which they will get staked stETH or stSOL in return – dependent on the asset they’re staking. The staking features are considered to be quite novel and give users tokens more versatility.

Users are able to use the staked tokens they receive to engage in DeFi inside the Lido ecosystem thanks to the use of the liquid ETH staking functionality. The same number of staked tokens will be received in exchange for the same amount of the asset being staked.

Staking Ethereum is made very easy with the use of Lido, and users are able to receive incentives while simultaneously trading with a liquid asset (stETH). There is an additional cost of 10% (penalties) on top of the rewards that have been accumulated, and any and all rewards are subject to specific penalties if deemed relevant.

The staking solutions by Lido offer users a decentralized alternative for staking assets. As this is a very new and novel solution, it will need an approach that is both transparent and fair; thus, the decentralized autonomous organization (DAO) intends to manage any potential concerns that may come up in the future.

The Lido DAO governance token is utilized to control various factors that affect the DAO treasury, the DAO treasury tokens, and how Lido lets users stake. Essentially, LDO token holders play an active part in the future of the protocol, its functionality, and the services provided by the protocol.

Initial Lido developers recognized the need for a sustainable staking infrastructure and thus LDO coins are the tokens that carry voting rights in the protocol. Through the use of a DAO, Lido aims to streamline processes and keep the protocol as democratic as possible.

Individuals interested in learning more about Lido can refer to the Lido Finance whitepaper.

 

What Is Lido DAO (LDO) Used For?

The Lido staking app has a core focus on Ethereum’s beacon chain and aims to provide users with an experience as similar to the Beacon chain as possible.

Staking incentives are reasonably clear and easy to grasp. An individual stakes X amount of X token for X number of days and in exchange gets X percent of annual profits.

For example, Peter engages in staking by depositing one ETH token for staking. According to the requirements of staking, Peter is required to keep the tokens locked up for one year to obtain an APY (annual percentage yield) of 3.5 %. However, because it is locked up, he won’t be able to utilize the ETH that he has put in.

After a period of twelve months, he will get his ETH, in addition to the 3.5 percent that he has accumulated.

Lido’s liquid staking operates in the same fashion, with the exception that users get stETH tokens in exchange for the ETH that they stake (at a 1:1 peg). By taking part in DeFi apps that are part of the Lido ecosystem and using these stETH tokens, users have the opportunity to earn staking incentives. This is an extremely original method of staking, in which participants are lavishly compensated for their participation.

Additionally, swing and arbitrage traders aim to capitalize on price volatility in LDO tokens (staked tokens aren’t tradable outside of Lido). These types of traders are capable of making a lot of profit but are exposed to significant risks.

 

Where To Buy Lido DAO (LDO)

Lido DAO (LDO) tokens can be purchased on most cryptocurrency exchanges and have recently become incredibly popular among avid crypto traders.

LDO coins can be acquired on several centralized cryptocurrency exchanges. However, before you can buy LDO, you must first deposit fiat money into an exchange, after which LDO tokens will be credited to your LDO digital wallet on the exchange.

The crypto exchanges below are the safest site where you can buy, sell and store LDO.

Five of the most popular crypto exchanges that US citizens use are:

1. Binance
2. Coinbase
3. KuCoin
4. HTX
5. Crypto.com

Most individuals opt to transfer the tokens they purchase on an exchange to a digital wallet. This is deemed to be more secure and allows individuals to have full control of their crypto assets.

 

About Lido DAO (LDO)

How long has Lido DAO (LDO) token existed?

Konstantin Lomashuk created Lido Finance in 2020. It has swiftly risen to become one of the most popular staking solutions for ETH investors.

Lido now has $6 billion in TVL (total value-locked). When compared to other DeFi services that offer Ethereum staking, this is significantly higher.

What’s controversial about Lido DAO (LDO)?

The crypto space is notoriously unregulated and this has led to the creation of several scam projects that have swindled people out of millions of dollars. Many individuals that are interested in the crypto space fail to do adequate research before investing, and this often has a detrimental result.

Individuals are encouraged to always be cautious before investing.

Let’s take a look at the top controversy surrounding Lido:

• DeFi Risks – Concerns have been raised about the possibility of exploiting smart contracts, as has been the case with several other protocols. If anything like this were to take place, there would be a situation that, without any alternative actions, would most likely result in the assets being lost forever.

How many Lido DAO (LDO) tokens are there?

At the time of writing, Lido DAO (LDO) has a circulating supply of 312,951,153.96 LDO.

The total supply of Lido DAO (LDO) is 1,000,000,000.

Can Lido DAO (LDO) be mined?

No, LDO can’t be mined. Lido is a liquid staking solution that has a primary focus on giving users more versatility for their staked assets, specifically staked ETH.

Individuals may use the staking tokens they acquire to engage in DeFi applications in the Lido ecosystem and earn further incentives.

What is the market cap of Lido DAO (LDO)?

The market cap of Lido DAO (LDO) is:

Lido DAO (LDO) market cap = total amount of Lido Tokens x current market price of LDO.

Lido DAO (LDO) Market Cap = 312,951,153.96 LDO x $1,44 = $453 million.

The market cap fluctuates according to the price of LDO tokens, and the number of tokens in circulation.

 

Biggest Competitors Of Lido DAO (LDO)

Lido’s liquidity staking solutions are new, and they have sparked significant interest and investment from both individual investors and companies. Standard liquidity pools do not address the problem of illiquidity and immobility associated with staking ETH on the beacon chain.

Lido Finance has quickly become known as one of the most reputable and credible staking platforms. Individuals that are seeking to stake ETH are particularly interested in making use of the platform. However, some competitors are offering users similar options.

Lido Finance’s biggest competitors are:

• Compound
• RocketPool
• Parallel Finance

 

What Are The Future Plans For Lido DAO (LDO)

Lido Finance will actively prioritize the security and functionality of its platform. The team will look to onboard more assets and create more staking pools for these assets. At the same time, the protocol will seek to increase its global exposure and bolster user adoption.

Lido currently has more than $6 billion in total value-locked and this makes it one of the leading protocols in the crypto space.

 

Pros and Cons of Lido DAO (LDO)

Pros:

• Liquid staking incentives – Individuals who participate in staking on Lido receive staked tokens and earn daily staking rewards. These assets can be used to participate in Lido’s DeFi ecosystem.
• No restrictions on staking – Users can start earning rewards on any amount of ETH, or applicable asset, that they stake on the platform.
• Huge TVL – Lido Finance is one of the leading protocols in terms of total value-locked. This indicates the amount of credibility the project has because users are entrusting the platform with their funds.
• Major partners – The unique platform has collaborated with industry heavyweights such as Coinbase Ventures and Andreessen Horowitz (a16z).
• User-friendly – Lido has an extremely user-friendly platform that is simple to navigate and makes it easy for users interested in staking assets.

Cons:

• Earnings vary significantly – The payouts are determined based on the total number of staked tokens on each daily basis. Variable reward rates are the result of the balance, and this instability contributes to the unpredictability of profits.
• DeFi risks – It is possible to exploit smart contracts, which might result in a loss that cannot be recovered until another solution is obtained. This is a huge concern among investors that utilize such platforms in general. Smart contract vulnerabilities can, and have been, exploited in recent years and many individuals refrain from using DeFi platforms for this reason.