Lido Community Proposes Ceasing Platform Services on Polygon, Focusing on Native ETH Liquidity Staking Provider

Lido Community Proposes Ceasing Platform Services on Polygon, Focusing on Native ETH Liquidity Staking Provider

Lido Community Proposes Ceasing Platform Services on Polygon, Focusing on Native ETH Liquidity Staking Provider

Lido Finance’s community members announced on Tuesday (17th) a proposal to discuss the closure of Lido’s services on Polygon in order to become a native ETH liquidity staking service provider and avoid the risks associated with a smaller Total Value Locked (TVL).

A community member named kentie proposed the closure for the following reasons:

Poor revenue: Currently, Lido’s TVL on Polygon is approximately 151 million MATIC (equivalent to around 76 million USD at the current price), and Lido DAO earns around 314,000 MATIC in fees annually on Polygon. However, Lido has spent at least 2,138,000 LDO (over 3 million USD) in the past 12 months to achieve this level of revenue. kentie believes that the return on investment is unsatisfactory.

Brand risk: Using the recent vulnerability in Lido on Polygon due to a technical upgrade as an example, kentie believes that Polygon’s technical issues could pose reputational risks to Lido.

Expensive compensation structure: The compensation structure proposed by Shard Labs, the liquidity staking solution provider for Lido on Polygon, is considered to be too expensive and unfeasible under the current macroeconomic conditions.

Uncertainty in Polygon’s roadmap: With Polygon migrating to updated tokens and undergoing a multi-year technological architecture overhaul, there is greater uncertainty on the chain. This would require significant changes and audit costs for Lido on Polygon, and may also lead to brand risks.

Lack of competition: Apart from Stader Labs, there are almost no other liquidity staking providers on Polygon.

Prior to the release of this proposal, the Lido community recently voted to stop providing services on Solana earlier this month, citing unsustainable financial conditions and lower costs on Solana. Lido has already ceased accepting new staking on Solana as of Monday (16th), and the team has stated that stSOL holders can unstake through Solana’s frontend interface until February 4, 2024.