ETH 2.0 - Lido

How To: Liquidity mining with SushiSwap Onsen

<h3 id="in-this-guide-we-walk-you-through-how-to-add-ldo-eth-liquidity-using-sushiswap-onsen-whilst-staking-your-slp-tokens-for-added-rewards-">In this guide we walk you through how to add LDO-ETH liquidity using <a href="https://sushiswap.fi/">SushiSwap Onsen</a>, whilst staking your SLP tokens for added rewards.</h3>A new <a href="https://sushiswap.fi/pair/0xc558f600b34a5f69dd2f0d06cb8a88d829b7420a">LDO-ETH liquidity pool</a> has been added to the <a href="https://sushiswap.fi/">SushiSwap</a> Onsen menu. Users that provide LDO-ETH liquidity into this pool will start receiving liquidity mining rewards - in the form of $SUSHI - whilst maintaining their exposure to LDO/ETH.<a href="https://sushiswap.fi/farms/special">Onsen</a> is a secondary product launched by SushiSwap in order to initiate liquidity mining incentives on their platform. These liquidity pools allow for future interoperability opportunities within the emerging DeFi ecosystem, whilst simultaneously improving market efficiency for the selected variety of endorsed tokens.  <h2 id="summary">Summary</h2><ul><li>Provide liquidity in the Onsen LDO-ETH pool to earn fee rewards.</li><li>Stake your liquidity tokens to earn rewards in the form of SUSHI tokens.</li><li>Retain your exposure to LDO/ETH.</li><li>Unstake whenever you decide to.</li></ul> <h2 id="how-does-onsen-work">How does Onsen work?</h2>SushiSwap Onsen hosts various external protocols to their very own hot springs (liquidity pools) to actively encourage users of these external protocols to stake their native tokens as liquidity.To participate in the Onsen pool, users must provide a 50/50 split of LDO and ETH/WETH.In exchange for users providing their native tokens as liquidity (which in our case is LDO), Onsen rewards users who are supplying liquidity to their Onsen pools with continual rewards, embodied in their very own native token: SUSHI. In doing so, Onsen liquidity pools remain liquid – allowing for efficient swaps with low slippage – and will facilitate itself as a large liquidity provider to users who want to swap in and out of their positions.Please be aware of the risks involved, namely <a href="https://blog.bancor.network/beginners-guide-to-getting-rekt-by-impermanent-loss-7c9510cb2f22">impermanent loss</a>. <h2 id="how-to-provide-liquidity-with-sushiswap-onsen">How to provide liquidity with SushiSwap Onsen</h2>Users can provide pool liquidity on Uniswap to improve the LDO market efficiency and earn token rewards. Liquidity providers get a split of trading fees corresponding to their “pool share”. <ol><li>Head over to the <a href="https://sushiswap.fi/pair/0xc558f600b34a5f69dd2f0d06cb8a88d829b7420a">LDO-ETH Onsen pool</a>.</li><li>Select the “+ Liquidity” button.</li><li>Select the LDO and ETH/WETH token amounts you would like to add to the liquidity pool. Note you must provide 50/50 LDO and ETH.</li><li>Confirm your choice by pressing Supply.</li><li>A notification box will appear confirming the amount of LDO/ETH Pool Tokens you will receive. Press Confirm Supply when ready.</li><li>Confirm using your Ethereum wallet.</li><li>Once confirmed you will be supplying liquidity to the LDO/ETH pool, and you will see a corresponding LDO/ETH Pool Token balance in your wallet. </li></ol> <figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://lh6.googleusercontent.com/S8zfu3-B-Yyqy9zVbAe73ZK-ag75fdxzOeT_KfmcbBWB4ZhaCh2ekvK978axx7cyAC6JfXtL7O_fmGfexmns7fffBiA0k_pUsckdT9JIJcqGh6x0LqkGl1EjR4mFhcr_8YBa4w-j" class="kg-image" alt><figcaption>Providing LDO/ETH liquidity with SushiSwap Onsen</figcaption></figure> To remove liquidity, visit the <a href="https://blog.lido.fi/liquidity-mining-with-sushiswap-onsen/sushiswap.fi/pair/0xc558f600b34a5f69dd2f0d06cb8a88d829b7420a">LDO SushiSwap pair</a> and choose ‘- Liquidity’ in the right-hand form. Choose the amount of liquidity to remove and press Remove when ready. Please note that your tokens must be unstaked before you are able to remove them from the LDO/ETH liquidity pool.  <h2 id="how-to-stake-your-ldo-eth-pool-tokens">How to stake your LDO/ETH Pool Tokens</h2>Liquidity Providers can multiply their earnings and earn additional $SUSHI token rewards - up to 16% APY at the time of writing - by staking their LDO/ETH Pool Tokens which they received for adding pool liquidity. <ol><li>To get started, visit <a href="http://sushiswap.fi/farms/special">sushiswap.fi/farms/special</a> and find the LDO pool.</li><li>On the right hand side, press Approve Staking. Confirm the choice with your Ethereum wallet.</li><li>Following a successful transaction, you will be able to stake your LDO-ETH SLP Tokens.</li><li>On the right hand side again, press Stake.</li><li>A pop-up box will now appear - enter the LDO-ETH SLP amount you want to stake and press Confirm. Confirm the transaction in your wallet.</li><li>Upon confirmation of the transaction, you will now be staking your LDO-ETH SLP Tokens entitling you to a token fee share as well as $SUSHI tokens.</li><li>Visit <a href="http://sushiswap.fi/farms/special">sushiswap.fi/farms/special</a> to view/confirm your staked balance.</li><li>To unstake, press Unstake and enter the amount of LDO-ETH SLP tokens to unstake. Confirm the transaction when ready. </li></ol> <figure class="kg-card kg-image-card"><img src="https://lh5.googleusercontent.com/e6HjHYEbPoGnGmQ1VyQSGkh88uAcQnTKsYzN5Au78fPtzkvpxmOWUdrssK69ovlUC2j803pzsPdfkpzX3GiovCJ21mM1Wh0kIVlFrSSNMYOLRO16NQ_wihhnZSAIQv3_XqJrXeJA" class="kg-image" alt></figure> <h2 id="track-your-sushiswap-rewards">Track your SushiSwap Rewards</h2>To track your rewards, visit <a href="https://sushiswap.fi/portfolio">sushiswap.fi/portfolio</a>. On this page you will be able to view the following:<ol><li>Your Total wallet balance</li><li>Sushi Balance</li><li>Liquidity Positions</li><li>Farm Value</li></ol>These components are described in more detail below.  <figure class="kg-card kg-image-card"><img src="https://lh6.googleusercontent.com/ybehyh5vQs5YOV4IJq2ZOObNkQ61CxT7Sq-2DPOCVI5HrnNiQKGUPB2rLfExgU98iiECX6O-Qvu0IeshDlylK18GuIcmmWHXi04uSt4wfcIS3nMTPfrUNmZ1dMuCQTMRK9JHeYlR" class="kg-image" alt></figure> 1. Your Total Wallet Balance is the combined value of your Sushi Balance, Liquidity Position and Farm Value, including both your staked and unstaked tokens within SushiSwap. 2. Your Sushi Balance represents your total balance of SUSHI tokens, including those that are Harvestable, Locked (⅔), Unstaked and Staked.<ul><li>Harvestable: Your share of earned SUSHI tokens (earned from staking) which are free to transfer/trade immediately. This represents ⅓ of your earned staking rewards.</li><li>Locked (⅔): The last ⅔ of your earned staking rewards are vested for 6 months. After 6 months these tokens become Harvestable and are thereby free to trade/transfer.</li><li>Unstaked: The share of your SUSHI tokens which are currently unstaked and not earning xSUSHI.</li><li>Staked: The share of your SUSHI tokens which are currently staked and earning xSUSHI. xSUSHI is a token similar to SLP tokens which you receive in exchange for staking your SUSHI. </li></ul>3. Your Liquidity Positions displays the share of tokens which you are adding to the LDO-ETH/WETH Liquidity Pool, including your original balance as well as any earned fees. Your earned fees are a product of the pool trading volume, together with your share of the pool. Please note that if you are staking your LDO-ETH SLP Tokens (to earn additional SUSHI rewards), they will not be displayed in this section.4. Your Farm Value displays the value of your staked LDO-ETH SLP Tokens, including your Rewards (SUSHI rewards from staking) and P/L (fees earned from providing pool liquidity).  <h2 id="how-to-attain-ldo-beforehand">How to attain LDO beforehand</h2>Users can purchase LDO beforehand and afterwards supply it as liquidity to the Onsen pool. Current markets include <a href="https://1inch.exchange/#/ETH/LDO">1Inch</a>, <a href="https://app.uniswap.org/#/swap">Uniswap</a> and <a href="https://coinmarketcap.com/currencies/lido-dao/markets/">more</a>. Alternatively, there is another liquidity mining event currently happening. Users can <a href="https://blog.lido.fi/providing-steth-liquidity-via-curve-to-receive-rewards/">supply stETH as liquidity via Curve</a> in order to earn LDO.This opens up the possibility of an experimental strategy where liquidity providers can stake their stETH into <a href="https://curve.fi">Curve</a>, farm LDO alongside CRV and trading fees, swap CRV into WETH, and then deposit LDO and WETH into the Onsen LDO-ETH liquidity pool to accrue SUSHI. Ultimately at the end, the strategy can also swap this SUSHI back into stETH to deposit back into Curve to accrue even more rewards.This strategy allows for liquidity providers who do not mind taking on more risk to earn even more rewards.This is a solid example of interoperability that is emerging in separate DeFi platforms within the greater DeFi ecosystem, a fundamental principle that Lido strongly maintains and intends to affirm with many other DeFi platforms and protocols. <h2 id="learn-more">Learn More</h2><ul><li><a href="https://blog.lido.fi/introducing-lido/">What is Lido?</a></li><li><a href="https://blog.lido.fi/how-lido-works/">How Lido works.</a></li><li><a href="https://stake.lido.fi">Stake with Lido.</a></li><li><a href="https://forum.sushiswapclassic.org/t/simp-2-onsen/1546">Understanding SushiSwap Onsen.</a></li></ul>

Lido

Lido, ETH 2.0

How To: Providing stETH liquidity via Curve

Users who provide liquidity in the Curve stETH pool and stake their LP tokens into the Curve gauge will receive 0.5% of the total LDO supply over the next 30 days proportionally to their provided liquidity. Rewards are paid out immediately. 500,000 LDO tokens were supplied to pool LPs between January and February, and the LDO reward initiative will now continue with another 0.5% of LDO supply distributed to liquidity providers on <a href="https://www.curve.fi/">Curve</a> between Feb 12 - March 12. The reward contract has been deployed. There is an active vote to transfer LDO from the DAO treasury to the rewards contract which will be responsible for distributing the LDO to the Curve liquidity providers who stake in the Curve gauge. LDO rewards are accrued per block.  <h2 id="summary">Summary</h2><ul><li>Provide liquidity in the Curve stETH pool and receive pool trading fees.</li><li>Receive LDO rewards proportional to your provided liquidity within 30 days.</li><li>Retain your exposure to stETH to earn staking rewards.</li><li>Unstake whenever you decide to.</li><li>Participate in the Lido DAO with newly acquired LDO.</li></ul> <h2 id="how-does-it-work">How does it work?</h2>The stETH pool is a liquidity pool that contains stETH and ETH. Users can interact with these pools to purchase stETH or ETH with low slippage. Any transactions that take place within this pool are paid out to liquidity providers via trading fees. Users who provide their liquidity to this pool will receive LP tokens in return. They can then stake their LP tokens into the Curve gauge to receive trading fees alongside the newly proposed incentivized rewards; LDO and CRV. <h2 id="why-is-this-important">Why is this important?</h2>Without a liquidity pool for stETH, users cannot swap their stETH for ETH. This swapping between stETH and ETH effectively unstakes their ETH from the Lido contract. Without any liquidity pools, users will not be able to unstake their staked ETH until Ethereum launches Phase 2.To incentivize liquidity for stETH, liquidity providers will be rewarded for providing their tokens into the Curve liquidity pool. In this way, liquidity providers will be incentivized to keep Lido liquid, where users can decide to unstake their ETH at any time for whatever amount. This proposal will benefit the Lido ecosystem and reward the early adopters who have interacted directly with Lido. <h2 id="curve-walkthrough">Curve Walkthrough</h2><h3 id="how-do-i-provide-liquidity-into-curve">How do I provide liquidity into Curve?</h3><ul><li>Visit <a href="https://www.curve.fi/steth/deposit">www.curve.fi/steth/deposit</a> and connect your wallet.</li><li>Provide liquidity in the Curve stETH pool by clicking “Deposit & stake in gauge”.</li><li>Choose the proportion of ETH/stETH to stake.</li><li>Modify the gas price and confirm the transaction.</li><li>Receive LP tokens in return.</li><li>These LP tokens should be automatically deposited into the gauge.</li><li>Start receiving LDO and CRV rewards alongside trading fees.</li></ul>When you deposit stETH to Curve, your tokens are split between ETH and stETH, with the precise balances fluctuating constantly due to price trading. This is done automatically and does not affect your share of the LDO distribution.  <figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://lh4.googleusercontent.com/FstZneySTCa1-SA07iKbs6tEq6gMCdsljb36AfA-P0kZlhHiJATOY08FVhiIL1SRQyDjjXDP-Z4dY1OfBxger76bfR7DDM25g2E3941rTHtm3YzonO-GQnIPwmvOyUlGCCYJN0cu" class="kg-image" alt><figcaption>Curve Deposit interface</figcaption></figure><h3 id="how-do-i-use-curve-gauges">How do I use Curve gauges? </h3>When using Curve, users can stake their LP tokens into the Curve gauge liquidity system to earn additional trading fees and incentivized rewards. To stake your stETH tokens in gauge:<ul><li>Visit <a href="http://www.curve.fi/steth/deposit">www.curve.fi/steth/deposit</a>.</li><li>If you have not made your first deposit, press “Deposit and stake in gauge”. This will automatically stake your deposited stETH and you will start earning steCRV.</li><li>If your stETH is already deposited but not staked, press “Stake unstaked in gauge”.</li><li>Using the ‘stake %’ field, choose the amount you want to stake. This can be unstaked anytime. </li></ul>Please note that when you stake your LP tokens - steCRV - using gauge, they will no longer be visible in your Metamask wallet. They will be visible again upon unstaking.  <h3 id="how-do-i-claim-my-rewards">How do I claim my rewards? </h3>Every time someone trades on this Curve pool you’ll get trading fees. They are accrued automatically every trading tx and you do not need to do anything here. To claim your rewards:<ul><li>Visit the <a href="https://www.curve.fi/steth/withdraw">Withdraw</a> page.</li><li>Click on “Claim” to receive your rewards - sent to your wallet - and to keep staking.</li><li>To exit the pool entirely, click “Withdraw and claim”. Upon doing so you will receive your rewards and withdraw your tokens from Curve back to your wallet.</li></ul> <figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://lh6.googleusercontent.com/QdyoFEFT7D4z1CyJj5MzuBWMy4AVYeGxb-YCGUG5tCzAQrOXlNq4rQ3AWr3SvO8JTeZPTTV_tO6dH5P32ZU50XxD7TtDXSWt4ywnTtzYxWG_L5mTcov_-gF1cNIdl70niRkZqG7r" class="kg-image" alt><figcaption>Curve Withdrawal interface</figcaption></figure><h3 id="how-do-i-withdraw-steth-from-curve">How do I withdraw stETH from Curve</h3>Curve allows you to unstake and withdraw at any time, in the token of your choice. When unstaking from gauges you effectively unstake your stETH so you no longer earn steCRV tokens. <ul><li>Unstake: To no longer stake your stETH in a Curve gauge to earn fees and additional steCRV LP tokens.</li><li>Withdraw: To withdraw your tokens from Curve to your wallet. </li></ul>There are 3 options when withdrawing from Curve - withdraw, withdraw & claim, unstake from gauge. To withdraw your tokens from Curve you will first need to unstake if doing so. To unstake your stETH from Curve:<ul><li>Visit the <a href="https://www.curve.fi/steth/withdraw">Withdraw</a> page.</li><li>Access the ‘advanced unstaking options’ towards the bottom of the dashboard.</li><li>Here you will see an overview of your staked tokens. Choose the amount of tokens you want to unstake and press ‘Unstake staked’. </li></ul> <figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://lh4.googleusercontent.com/kXb4BSstHFWk7aRwWGrQQVsjHl3BuJxvyg95Wnnj-83czNE2DxHOgqj-C-0HTM-5VZLfEXlhIcyUFa7pEWiAGX0wV5cbOovzity2Y5qyIlkjQ7OnNjXgtlspE6YPy-4AcKCsjPBP" class="kg-image" alt><figcaption>Curve Staking/Unstaking interface</figcaption></figure> After unstaking your tokens you can now withdraw them from Curve.<ul><li>To exit the pool entirely, click “Withdraw and claim”. Upon doing so you will receive your rewards and withdraw your tokens from Curve back to your wallet.</li><li>Fill in the total amount of tokens you wish to withdraw (share of liquidity) or the precise token amounts (in ETH and stETH). You can also choose the combination of tokens to withdraw to your wallet - the split between ETH and stETH. </li></ul>Upon confirmation of withdrawal using your Ethereum wallet, your tokens will be withdrawn from Curve to your wallet. <h3 id="how-to-get-steth-token">How to get stETH token</h3>You can find a guide on how to stake ETH for stETH <a href="https://blog.lido.fi/staking-ethereum-with-lido/">here</a>. <h2 id="what-s-to-come">What’s to come?</h2>Another liquidity pool for stETH has been proposed. The stETH/DAI liquidity pool has been proposed by 0xMaki, a core team member and developer of SushiSwap, to be used in SushiSwap’s Onsen program.There are many plans for stETH to be used in a variety of DeFi protocols in the future such as lending protocols, yield farming strategy protocols, aggregators, and many more to come. These are outlined in more detail here: <a href="https://research.lido.fi/t/possible-defi-protocol-integrations-with-lido-and-their-respective-incentives/50">Possible DeFi protocol integrations with Lido and their respective incentives</a>.We highly encourage users to submit their proposals on the Lido forums to share their ideas to the community. <h2 id="resources">Resources</h2><ul><li><a href="https://blog.lido.fi/introducing-lido/">What is Lido?</a></li><li><a href="https://blog.lido.fi/how-lido-works/">How Lido Works</a></li><li><a href="https://resources.curve.fi/base-features/understanding-curve">Understanding Curve</a></li></ul>

Kasper Rasmussen

ETH 2.0, Architecture, General

The Lido Withdrawal Key Generation Ceremony

The <a href="https://lido.fi/">Lido</a> DAOs first set of withdrawal keys were generated during a ceremony that took place between December 13th and 16th, 2020, performed by a group of the industry’s most trusted builders.  Chorus One, Staking Facilities, Certus One, Argent, Banteg (yearn.finance), Alex Svanevik (Nansen), Anton Bukov (1inch), Michael Egorov (Curve/Nucypher), Rune Christensen (MakerDAO), Will Harborne (DeversiFi) and Mustafa Al-Bassam (LazyLedger) came together over a four-day event to generate threshold signatures for Lido’s withdrawal keys in a secure environment on air-gapped machines. Everything went smoothly and participants and the broader Ethereum community are thanked for their efforts and constant support. <figure class="kg-card kg-embed-card"><blockquote class="twitter-tweet" data-width="550">After a lot of QR code scanning and a couple of sleepless night, the distributed key generation ceremony for <a href="https://twitter.com/lidofinance?ref_src=twsrc%5Etfw">@lidofinance</a> is complete. DKG identifier: ae7f71bb34b74eab0cea8c2931d4b0b2 PubKey: tnrKcfBLZzA3tUAJt2Dxlh84NuVxQUHIkq/bdewINNzmeE2ccu2K19syjP+P6fE+ <a href="https://t.co/6umMmEUJ9j">pic.twitter.com/6umMmEUJ9j</a>— banteg (@bantg) <a href="https://twitter.com/bantg/status/1338914169408655365?ref_src=twsrc%5Etfw">December 15, 2020</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> </figure> DKG identifier: ae7f71bb34b74eab0cea8c2931d4b0b2PubKey: tnrKcfBLZzA3tUAJt2Dxlh84NuVxQUHIkq/bdewINNzmeE2ccu2K19syjP+P6fE+ <h3 id="why-was-a-ceremony-necessary">Why was a ceremony necessary?</h3><a href="https://ethereum.org/en/eth2/">Ethereum 2.0</a> doesn’t have any contract execution functionality right now, which means you can’t deploy smart contracts or set up a multisig. When you stake your ETH you need to specify an ETH 2.0 key called withdrawal credentials. In order to make liquid staking work, a solution was necessary for who will hold this key and, more importantly, how to transition it to the Lido DAO.  That is why a distributed custody solution for the beacon chain was developed by Lido and audited by Sigma Prime: <a href="https://github.com/lidofinance/dc4bc">https://github.com/lidofinance/dc4bc</a>. All deposits into Lido are delineated by 32 ETH and assigned to node operators who validate using these deposits. Funds are deposited to the Lido protocol smart contract and then are locked into the Ethereum proof-of-stake deposit contract. Initially, withdrawal credentials for deposited ether will be set to Lido’s threshold signature of distributed custody. This threshold signature account controlled by the Lido DAO is specified as a staking withdrawal address.  In practice, this means that users would need to trust this withdrawal address to return the ETH to which they have a claim. This is not the preferred solution but is a (temporary) reality for all the liquid staking protocols due to ETH 2.0’s staking design, and so it was designed and developed in the way that seemed like the best practical solution at the time. The reason Lido’s participants went to the lengths of a several-day distributed custody key generation event was to decrease the amount of trust required. The withdrawal key was split into 11 different parts, each held by a different participant. Instead of one party now having access to these withdrawal keys, it would instead require collusion of many parties from those who participated in the ceremony. Many other liquid staking protocols are instead relying on a single party to hold these keys which is believed to be an inferior solution. <figure class="kg-card kg-embed-card"><blockquote class="twitter-tweet" data-width="550">Verifying: I have submitted my public keys for participation in the Distributed Key Generation ceremony for <a href="https://twitter.com/lidofinance?ref_src=twsrc%5Etfw">@lidofinance</a> withdrawal credentials: lI+5jYVEif+dmJpWAi0v2eZd0oAQ3yMHQ7/cF1cODbrkr/R0U0K6IgZX9INuhiNu <a href="https://t.co/5rj43I6Wjs">https://t.co/5rj43I6Wjs</a>— Mustafa Al-Bassam (@musalbas) <a href="https://twitter.com/musalbas/status/1338116087536291841?ref_src=twsrc%5Etfw">December 13, 2020</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> </figure> The preferred solution would require eth1 withdrawal addresses to be accepted by the Ethereum community. If/when this happens, the withdrawal credentials will instead be set to an upgradeable smart contract that will handle withdrawals when they are enabled -- an entirely non-custodial liquid staking solution. This should happen in the near future and the feasibility to migrate to this kind of solution as soon as it's practical will be evaluated from time to time. <h3 id="why-lido-s-distributed-custody-is-a-better-approach">Why Lido’s distributed custody is a better approach</h3> Distributing custody based on threshold signatures by some of the most respected and reputable people in DeFi seems like a much better solution for Lido to adopt at this time than having the withdrawal credentials owned by one single holder.  When it becomes technically feasible to transition to a fully non-custodial solution, the only purpose of this distributed custody will be to rotate withdrawal credentials to an autonomous withdrawal smart contract. <h3 id="here-s-what-is-targeted-in-the-future">Here's what is targeted in the future</h3> In the near future, when ETH 1 withdrawal credentials are available on ETH 2, Lido should move away from distributed custody to a fully non-custodial solution. Read more: <a href="https://ethresear.ch/t/simple-eth1-withdrawals-beacon-chain-centric/8256.">https://ethresear.ch/t/simple-eth1-withdrawals-beacon-chain-centric/8256.</a> The Ethereum community seems to recognise and agree that a fully centralised solution isn't the best choice to depend on for the security of the largest smart contract platform, and trusts Lido DAO and Lido to always provide the best feasible solution for the Ethereum liquid staking. Any feedback or questions on this is welcome. <h3 id="stake-with-lido">Stake with Lido</h3>Lido has launched. Stake with Lido now: <a href="https://stake.lido.fi/">stake.lido.fi</a>.

Kasper Rasmussen

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