<h3 id="the-partnership-protects-eth2-stakers-on-lido-against-slashing-related-risks">The partnership protects Eth2 stakers on Lido against slashing-related risks</h3><p>We are thrilled to announce our partnership with <a href="https://www.unslashed.finance/">Unslashed Finance</a>, a novel blockchain-based insurance protocol, to cover approximately $200 million worth of staked ether from slashing. </p><p>In a DAO-a-DAO transaction, the Lido DAO completed a purchase of slashing cover for <a href="https://etherscan.io/tx/0x4884100e3bc4af28dac3688f68fa351095c83e6dd971873b2e16f60d04288760">196,749.86 stETH</a> protecting Lido stakers against up to 5% in slashing penalties for stakers with Lido. </p><figure class="kg-card kg-embed-card"><blockquote class="twitter-tweet" data-width="550"><p lang="en" dir="ltr"><a href="https://twitter.com/LidoFinance?ref_src=twsrc%5Etfw">@LidoFinance</a> has just purchased enough slashing cover for 196,749.858268 stETH from <a href="https://twitter.com/UnslashedF?ref_src=twsrc%5Etfw">@UnslashedF</a>, DAO-a-DAO. <a href="https://t.co/XtHGDmFgWf">https://t.co/XtHGDmFgWf</a></p>— Vasiliy Shapovalov (@_vshapovalov) <a href="https://twitter.com/_vshapovalov/status/1361002502561366019?ref_src=twsrc%5Etfw">February 14, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> </figure><p>Insurance of this kind is of vital importance to Ethereum stakers and its significance cannot be overstated. Amongst other things, this move works to: </p><ul><li>Provide a safer staking experience for users to encourage inclusivity and transparency. </li><li>Build trust between Lido and Ethereum stakers, demonstrating the efforts that the Lido DAO takes to protect stakers. </li><li>Set the precedent that staking insurance is a must-have for serious staking services. </li></ul><p>The need for a partnership of this calibre stems from the existence of an inherent slashing risk on Ethereum 2.0 when staking to Eth2 validators. Slashing refers to the forfeiting of rewards and subsequent losses for an Ethereum validator due to a multitude of factors associated with breaking network consensus, including node downtime or double-signing. It represents a penalty for ineffective validation and results in a loss of funds for validators and, subsequently, for entities staking with these validators.</p><p>Since our launch in December 2020 as the first liquid Ethereum staking solution, we have staked more than 180,000 ETH (~$270,000,000) in our contracts, deposited amongst more than 3370 unique stakers. This partnership works to protect Lido stakers against balance decreases associated with slashing and offline penalties for validators across the Lido DAO, mitigating one of the fundamental risk factors associated with Eth2 staking.</p><p>Since their launch in January 2021, Unslashed have sold more than $400m worth of protection and have seen more than $70m worth of capital used to underwrite a variety of insurance policies. Their first structured insurance product, named Spartan Bucket, contains 24 different policies ranging from Uniswap smart contract insurance to protection against slashing on Lido’s liquid Ethereum staking service.</p><h3 id="to-stake-with-lido-visit-stake-lido-fi-">To stake with Lido, visit <a href="https://blog.lido.fi/lido-unslashed-finance-partner-to-insure-ethereum-staking-service/stake.lido.fi">stake.lido.fi</a>.</h3><h3 id="to-learn-more-about-unslashed-insurance-visit-unslashed-finance-">To learn more about Unslashed insurance, visit <a href="https://www.unslashed.finance/">unslashed.finance</a>.</h3>
<p><em>In this guide, we walk you through how to navigate 1inch’s ‘Quadro Farming’ program, letting stETH-LDO LPs earn rewards in 4 unique ways. </em></p><p>On February 2nd, 1inch announced a new <a href="https://1inch.exchange/#/dao/pools?token0=0x5a98fcbea516cf06857215779fd812ca3bef1b32&token1=0xae7ab96520de3a18e5e111b5eaab095312d7fe84">LDO-stETH liquidity pool</a> allowing liquidity providers on the site to earn rewards in four different ways:</p><ol><li>LPs contributing liquidity to the pool will earn 1INCH tokens.</li><li>LPs will earn a proportion of pool swap fees.</li><li>Users will earn stETH as an <a href="https://www.lido.fi">Ethereum staking</a> reward (in line with Lido’s Eth2 staking APR).</li><li>To encourage liquidity, Lido is voting on the <a href="https://research.lido.fi/t/proposal-ldo-incentives-to-liquidity-providers-on-ldo-steth-pair-on-1inch-exchange/274">allocation of LDO tokens</a> to supplement the reward rate. </li></ol><p>The 1inch stETH-LDO program started on February 2nd - 00.01 UTC - and will run for a period of 4 weeks. Throughout this 4 week period, 0.02% of the 1INCH token supply will be distributed to pool LPs (300,000 1INCH tokens). In line with this, Lido will allocate an additional 0.025% of the LDO token supply (250,000 LDO tokens) to the liquidity initiative. </p><p>1inch Liquidity Protocol is an initiative intended to develop the liquidity surrounding new tokens. By taking part in this program, the Lido community will benefit from improved token stability and liquidity, much to the benefit of both Lido DAO members and Ethereum stakers. </p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h2 id="summary">Summary</h2><ul><li>Provide liquidity in the stETH-LDO liquidity pool to earn 1INCH tokens and pool swap trading fees.</li><li>Benefit from Eth2 staking rewards through exposure to stETH.</li><li>Earn additional rewards through an LDO token allocation.</li><li>Retain your exposure to LDO and stETH.</li><li>Receive rewards in real-time.</li><li>Unstake your pooled tokens at the click of a button.</li></ul><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h2 id="what-is-1inch">What is 1inch?</h2><p><a href="https://1inch.exchange/">1inch</a> is a liquidity and decentralised exchange aggregator which sources liquidity from a number of DEX platforms including Uniswap, Curve, 0x, and many more. 1inch splits single trades across multiple DEXs for users to get the best market rates. </p><p>Users wishing to participate in the pool should provide stETH and LDO in a 50/50 split. </p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h2 id="how-to-provide-liquidity-to-1inch">How to provide liquidity to 1inch</h2><p>Users can easily provide pool liquidity on 1inch to improve liquidity and price stability of both LDO and stETH, earning 4 separate rewards in the process. </p><ol><li>Visit <a href="https://1inch.exchange/#/dao/pools">1inch.exchange/#/dao/pools</a>.</li><li>Search for LDO using the filter.</li><li>Select the LDO / stETH ‘Farming’ pool.</li><li>Click ‘Provide Liquidity’.</li><li>Choose the proportion of LDO and stETH you wish to provide. Please note this will automatically be done in a 50/50 split.</li><li>Choose the quantity of LP tokens to mint. This will be based on the quantity of LDO and stETH you provide. Read more about 1inch LP tokens below.</li><li>Once you are satisfied with the numbers, press Unlock and unlock both your LDO and stETH tokens. You will need to confirm both of these events using your Ethereum wallet.</li><li>Once tokens are unlocked, press Provide Liquidity and confirm the transaction using your Ethereum wallet.</li></ol><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://lh5.googleusercontent.com/BYIOUwsWpefRn3VG6WOp0WT_-0CMCbHnPF1GHJLZPAZ54x1bjRtWRPIJQlLKBVliXmFS7s4DFUDJO4UzCF9X1_WkEo91d8XDhgDiAACiLo4dUYmkLA-LypYNOU2svKZILZ9RGty1" class="kg-image" alt><figcaption><a href="https://blog.lido.fi/guide-to-1inch-quadro-farming/1inch.exchange/#/dao/pools">1inch LDO-stETH pool</a></figcaption></figure><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h2 id="how-to-contribute-to-1inch-liquidity-farms">How to contribute to 1inch Liquidity Farms</h2><p>Once the transaction has been completed you will be providing liquidity to the stETH-LDO pool on 1inch. </p><p>By doing so you will have earned 1LP-stETH-LDO Tokens, which represent your stake in the liquidity pool. Your 1inch LP tokens can be staked across 1inch Farms for the additional rewards outlined above. </p><p>To stake 1inch LP tokens, follow these steps:</p><ol><li>Visit <a href="https://1inch.exchange/#/dao/farming">1inch.exchange/#/dao/farming</a>.</li><li>Navigate to the stETH-LDO farm.</li><li>Once found, click Deposit.</li><li>A pop-up window will show up with your 1LP-stETH-LDO balance and an overview of your staked amount and daily/monthly/yearly earnings.</li><li>Choose the amount of 1LP-stETH-LDO you wish to stake out of your existing balance and press Unlock Token. Confirm the transaction in your Ethereum wallet.</li><li>Once unlocked, you can now deposit your 1inch LP tokens. Do so by clicking Deposit and confirming the transaction using your Ethereum wallet. </li></ol><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h2 id="how-to-acquire-steth-ldo">How to acquire stETH / LDO</h2><p>Users interested in contributing to the 1inch ‘Quadro Farming’ program can purchase stETH and LDO beforehand using the 1inch aggregator markets. </p><p>To do so, visit <a href="https://1inch.exchange/#/">1inch.exchange/#/</a><strong> </strong>and swap your ETH to LDO, stETH or both. </p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://lh4.googleusercontent.com/z0d2DBvFMbMrzfJDa9di9HUFVfycq0VSv7XnFU0ue0Vyy0LYsTV6uQsus01-HuFOTuUeCdQYvOm-YmzuQNaUjl_QMgiEQlbxRA2qox2Grd8XJiSaQSWyuQyRkNBjY-tAWHMKpL09" class="kg-image" alt><figcaption><a href="https://1inch.exchange/">The 1inch exchange interface</a></figcaption></figure><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><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://help.lido.fi/hc/en-us/articles/360018916980-1Inch-FAQ">1inch FAQ</a>.</li><li><a href="https://help.lido.fi/hc/en-us/articles/360018914220-Staking-with-Lido-using-1inch">Staking with Lido using 1inch</a>.</li></ul>
<p>Lido is live! You can now stake your ETH with Lido to contribute to the security of the ETH network whilst earning daily rewards for doing so. </p><p>Visit <a href="https://stake.lido.fi">stake.lido.fi</a> to get started. 🏝️</p><h2 id="summary">Summary</h2><ul><li>Stake Ethereum with Lido to earn up to a maximum of 18.10% a year in staking rewards.</li><li>Stake whatever amount you want - there are no minimum Ethereum staking deposits with Lido.</li><li>Receive stETH when staking - a tokenised version of your staked ETH - which value updates daily to reflect your earned staking rewards.</li><li>Stake directly from your Metamask, Ledger or other wallet of preference - no need to trust a centralised entity with your staking. </li><li>When you stake with Lido you stake across a set of proven validators with a track-record of excellence in the field of staking to minimise slashing and hostage risks. </li></ul><h2 id="what-is-lido">What is Lido</h2><p>Lido is a liquid staking solution for ETH 2.0 backed by a number of the industries leading blockchain staking providers. Lido allows users to stake any amount of ETH - without the need to maintain complex infrastructure - whilst preserving the liquidity of their ETH through the stETH token. This lets users stake their ETH whilst participating in on-chain activities of their choice, e.g. lending and yield farming.</p><p>When you stake with Lido you receive stETH tokens on a 1:1 basis representing your staked ETH. This stETH balances can be used like regular ETH to earn yields and lending rewards, and are updated on a daily basis to reflect your ETH staking rewards. <br><br>The goal with Lido is to solve a number of the problems associated with ETH 2.0 staking - illiquidity, immovability and accessibility - making staked ETH liquid and allowing for network participation with any amount of ETH.</p><h2 id="how-to-stake-ethereum-with-lido">How to stake Ethereum with Lido</h2><p><strong>1.</strong> Visit <a href="https://stake.lido.fi">stake.lido.fi</a> and press 'Connect Wallet'.</p><p><strong>2.</strong> When shown wallet options, choose preferred option. With your wallet connected you should be able to view your ETH balance within the Lido widget.</p><p><strong>3. </strong>Enter the amount of ETH you want to stake. When ready, press Stake. Note that you will be able to view your Transaction Fee, stETH Balance and Annual Percentage Rate prior to confirming.</p><p><strong>4. </strong>Confirm the transaction in your wallet.</p><p><strong>5. </strong>Your wallet now contains the amount of ETH you staked - in stETH - visible in your wallet. Your stETH balance is updated daily to reflect staking rewards.</p><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://blog.lido.fi/content/images/2020/12/Staking-with-Lido.gif" class="kg-image" alt><figcaption>Staking your ETH using <a href="https://stake.lido.fi">Lido</a></figcaption></figure><h3 id="ethereum-staking-rewards">Ethereum staking rewards</h3><p>The Ethereum staking reward rate is variable and changes based on the total amount of ETH staked. If the total amount of ETH staked is low then the reward rate will be higher, with a maximum annual reward rate of 18.10%. </p><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://blog.lido.fi/content/images/2020/12/Screenshot-2020-12-19-at-18.54.39.png" class="kg-image" alt srcset="https://blog.lido.fi/content/images/size/w600/2020/12/Screenshot-2020-12-19-at-18.54.39.png 600w, https://blog.lido.fi/content/images/size/w1000/2020/12/Screenshot-2020-12-19-at-18.54.39.png 1000w, https://blog.lido.fi/content/images/2020/12/Screenshot-2020-12-19-at-18.54.39.png 1288w" sizes="(min-width: 720px) 720px"><figcaption>Ethereum staking rewards</figcaption></figure><p>To track the current Ethereum staking rate, visit <a href="https://www.stakingrewards.com/earn/ethereum-2-0">stakingrewards.com/earn/ethereum-2-0</a>.</p><h3 id="lido-staking-fees">Lido staking fees </h3><p>Lido applies a <strong>10% fee</strong> on staking rewards, split between node operators, the DAO and an insurance fund. Thisa fee can be changed by the DAO pending a successful vote.</p><p>If you have a question, stop by the <a href="https://help.lido.fi/hc/en-us/sections/360004923620-FAQ">Lido Staking FAQ</a>. If you can't find what you're looking for then we encourage you to submit a question. If you're having trouble staking your Ethereum using Lido, please refer to the following guide:</p><ul><li><a href="https://help.lido.fi/hc/en-us/articles/360018508799-Staking-ETH-using-Metamask">Stake Ethereum using Metamask</a></li><li><a href="https://help.lido.fi/hc/en-us/articles/360018480060">Ethereum staking fees</a></li></ul><h2 id="using-your-steth-token">Using your stETH token</h2><p>When you stake ETH with Lido you receive stETH to reflect your staked Ethereum. This stETH token represents your staked ETH, with its value changing daily to reflect earned staking rewards. Once transactions are enabled on Eth2, you can redeem your staked ETH using your stETH. </p><ul><li><strong>Contract address</strong>: <a href="https://etherscan.io/address/0xae7ab96520de3a18e5e111b5eaab095312d7fe84">0xae7ab96520DE3A18E5e111B5EaAb095312D7fE84</a></li><li><strong>Symbol</strong>: stETH</li><li><strong>Decimals</strong>: 18</li></ul><p><strong>If you are having trouble viewing your stETH balance after staking, follow these instructions: <a href="https://help.lido.fi/hc/en-us/articles/360018478320-Adding-stETH-To-Metamask">Adding stETH To Metamask</a>.</strong></p><p>stETH is a liquid token which can be traded, sent, lent and more, allowing you to participate in DeFi activities even after staking. </p><h2 id="what-s-next">What's next?</h2><p>Over the coming weeks we will be seeing the growth of the Lido and stETH ecosystem, with stETH evolving as a building block for other applications and protocols. As more and more applications begin to allow for interaction with stETH, the benefits of liquid Ethereum staking will become more and more obvious. </p><p>In addition to this we aim to see the growth in <a href="https://research.lido.fi/">Lido DAO discussions</a>, with incoming proposals on validator admissions, fee distributions and more. Have a suggestion you'd like discussed? Submit it!f</p><h2 id="the-lido-dao-community">The Lido DAO community</h2><p>Let's connect! If you have any questions, suggestions, concerns or feedback, we'd love to hear from you. </p><ul><li><a href="https://twitter.com/lidofinance">Twitter</a></li><li><a href="https://research.lido.fi/">Lido DAO Forum</a></li><li><a href="https://t.me/lidofinance">Telegram</a> | <a href="https://t.me/lidonews">Announcements</a></li><li><a href="https://discord.com/invite/vgdPfhZ">Discord</a></li><li><a href="https://www.reddit.com/r/LidoFinance/">Reddit</a></li><li><a href="https://github.com/lidofinance">Github</a></li><li><a href="https://lido.fi/static/Lido:Ethereum-Liquid-Staking.pdf">Lido Primer</a></li></ul>
<p><br>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. </p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>Everything went smoothly and participants and the broader Ethereum community are thanked for their efforts and constant support.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><figure class="kg-card kg-embed-card"><blockquote class="twitter-tweet" data-width="550"><p lang="en" dir="ltr">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.<br><br>DKG identifier: ae7f71bb34b74eab0cea8c2931d4b0b2<br>PubKey: tnrKcfBLZzA3tUAJt2Dxlh84NuVxQUHIkq/bdewINNzmeE2ccu2K19syjP+P6fE+ <a href="https://t.co/6umMmEUJ9j">pic.twitter.com/6umMmEUJ9j</a></p>— 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><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p><strong>DKG identifier</strong>: ae7f71bb34b74eab0cea8c2931d4b0b2</p><p><strong>PubKey</strong>: tnrKcfBLZzA3tUAJt2Dxlh84NuVxQUHIkq/bdewINNzmeE2ccu2K19syjP+P6fE+</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h3 id="why-was-a-ceremony-necessary">Why was a ceremony necessary?</h3><p><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. </p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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>.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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. </p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><figure class="kg-card kg-embed-card"><blockquote class="twitter-tweet" data-width="550"><p lang="en" dir="ltr">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></p>— 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><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h3 id="why-lido-s-distributed-custody-is-a-better-approach">Why Lido’s distributed custody is a better approach</h3><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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. </p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h3 id="here-s-what-is-targeted-in-the-future">Here's what is targeted in the future</h3><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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></p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>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.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h3 id="stake-with-lido">Stake with Lido</h3><p>Lido has launched. Stake with Lido now: <a href="https://stake.lido.fi/">stake.lido.fi</a>.</p>
<p>Lido is a liquid Ethereum staking solution letting you earn staking rewards with no lock-ups or minimum deposits whilst contributing to the security of the Ethereum 2.0 chain.</p><p>We're thrilled to announce the launch of the Lido protocol testnet, which allows users to stake and convert testnet ETH to staked ETH(stETH). With this also comes the test launch of the Lido DAO governance tools for the Ethereum staking service. </p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h2 id="testnet-objectives"><strong>Testnet Objectives</strong></h2><p>The testnet launch sees the deployment of contracts - on Goerli testnet - to test Lido in dynamic conditions and gain operational experience for participants. An added bonus is that the testnet will demonstrate the simplicity of staking Ethereum with Lido.</p><p>Objectives with respect to Lido over the coming weeks are to:</p><ul><li>Perform distributed key generation ceremony for withdrawal credentials, which will hold all Lido's staked ether;</li><li>Deploy the Lido DAO, distribute governance tokens, and set up all necessary parameters via DAO members voting procedures;</li><li>Assign and launch oracles, which are responsible for reporting cumulative Lido balances on the Ethereum 2.0 beacon chain to the smart contract;</li><li>Assign node operators to whom staking on the Ethereum 2.0 beacon chain will be delegated; and</li><li>Start accepting ether deposits in Goerli and check Lido’s operations.</li></ul><p>In addition to showcasing what has been developed, this testnet launch is an opportunity for Ethereum validators to demonstrate their expertise. Lido stakes through a set of proven validators and, in order to guarantee performance, the validators are best-in-industry.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h2 id="testnet-roadmap"><strong>Testnet Roadmap</strong></h2><p>The roadmap for the coming week is as follows:</p><h3 id="wednesday-nov-25"><strong>Wednesday | Nov 25</strong></h3><ul><li>The first Lido signature generation ceremony is conducted.</li><li>The final testnet version of the protocol is deployed.</li><li>The <a href="https://docs.google.com/document/d/1S0cLkS8r3YihZ3vTBsHYFqyIkOT-y-SKhxRIFAsb87E/edit?usp=sharing">DAO Token Holder Manual</a> is published.</li><li>DAO holders vote for initial protocol parameters and for the inclusion of Node Operators and Oracles.</li></ul><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><p>At this point, the protocol is ready to accept user funds. There will be a quick run for working validators to earn revenue as early as possible, given the clog in Pyrmont validator entry queue.</p><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><ul><li>A Node Operator with 10 signing keys will be added and accepted by the DAO with the testnets orchestrators (combined, testnet orchestrators votes will reach the quorum to ensure the test run will run to completion).</li><li>The testnet orchestrators will perform DAO voting for setting the withdrawal credentials chosen during the ceremony.</li><li>Testnet orchestrators will submit 320 ETH and use the protocol to deposit them using the keys submitted in the first step.</li><li>One node operator is needed to assist with running that first validator node — please let us know if you’re willing to help.</li></ul><h3 id="thursday-nov-26"><strong>Thursday | Nov 26</strong></h3><ul><li>The second, text-based, signature generation ceremony is started. This ceremony will last until Tuesday, Dec 1. It won’t be used in the testnet, just generated.</li><li>Node Operator and Oracle manuals are published.</li><li>Oracle Committee Members deploy oracle daemons (at least 5 Oracle Committee Members).</li><li>Node Operators generate and submit signing keys (100 keys each, at least 6 operators).</li><li>Node Operators deploy validator clients for the submitted keys.</li></ul><h3 id="friday-nov-27"><strong>Friday | Nov 27</strong></h3><ul><li>DAO token holders vote for accepting the signing keys submitted by Node Operators.</li><li>DAO token holders initiate depositing the received and buffered user funds to the Beacon chain.</li></ul><h3 id="saturday-nov-28"><strong>Saturday | Nov 28</strong></h3><ul><li>Monitoring the system working as intended and performing more deposits.</li></ul><h3 id="monday-nov-30"><strong>Monday | Nov 30</strong></h3><ul><li>Testing integration with Uniswap v1.</li></ul><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><h2 id="testnet-resources"><strong>Testnet Resources</strong></h2><p>If you are interested in Lido’s progress or to try out testnet staking with Lido, please refer to the following resources:</p><ul><li><a href="https://lido.fi/static/Lido:Ethereum-Liquid-Staking.pdf">Lido: Ethereum Liquid Staking - A Primer</a></li><li><a href="https://github.com/lidofinance">Lido Github Repo</a></li><li><a href="https://discord.com/channels/761182643269795850/774313727603638292">Developer Chat Support</a></li><li><a href="https://docs.google.com/document/d/1S0cLkS8r3YihZ3vTBsHYFqyIkOT-y-SKhxRIFAsb87E/edit?usp=sharing">Lido DAO Member Manual</a></li></ul><!--kg-card-begin: markdown--><p> </p> <!--kg-card-end: markdown--><figure class="kg-card kg-embed-card"><blockquote class="twitter-tweet" data-width="550"><p lang="en" dir="ltr">Established operators including <a href="https://twitter.com/CertusOne?ref_src=twsrc%5Etfw">@CertusOne</a>, <a href="https://twitter.com/ChorusOne?ref_src=twsrc%5Etfw">@ChorusOne</a>, <a href="https://twitter.com/P2Pvalidator?ref_src=twsrc%5Etfw">@P2PValidator</a>, <a href="https://twitter.com/stakefish?ref_src=twsrc%5Etfw">@stakefish</a> & <a href="https://twitter.com/StakingFac?ref_src=twsrc%5Etfw">@StakingFac</a> will join Lido as validators to launch liquid staking on Ethereum. <a href="https://t.co/JOpq7egKrT">https://t.co/JOpq7egKrT</a></p>— Lido (@lidofinance) <a href="https://twitter.com/lidofinance/status/1329151140718632961?ref_src=twsrc%5Etfw">November 18, 2020</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> </figure><p>If you are an experienced validator interested in contributing to Lido, please get in touch. To register your interest in staking with Lido,<a href="https://lido.fi/stake"> let us know</a>.</p>
<p>In the next few weeks, Ethereum is expected to launch ETH 2.0 and begin the transition to proof of stake (PoS) as discussed in the original Ethereum whitepaper.</p><p>PoS networks are not new. Although Tezos and Cosmos are amongst the 100s of networks that are secured by PoS today, when Ethereum’s transition is complete, it will be the largest PoS network by a significant margin. </p><p>Ethereum’s PoS launch raises some additional interesting issues:</p><ol><li>Early stakers will lock their ETH until transactions are enabled on ETH 2.0, which could be a few months or several years.</li><li>ETH cannot be moved/traded or used as collateral when a user is staking ETH — in other words, staked ETH is illiquid.</li><li>Users can only stake multiples of 32 ETH.</li></ol><h3 id="early-staking-commitment">Early staking commitment</h3><p>When ETH 2.0 launches it will be a multi-phase rollout. Staking will launch quite early, but the state transitions — including transfers — will not be launched until later phases of the ETH 2.0 transition. Without transactions enabled, it will be impossible to move, trade or spend ETH that has been staked.</p><p>Practically, this means that any ETH staked on ETH 2.0 early in the rollout will be locked and unmoveable for a period of time — possibly even up to 2 or 3 years.</p><p>This may deter participation in staking on ETH 2.0 given that users sacrifice the ability to use, sell, trade or do anything else with their ETH for that period of time.</p><h3 id="illiquidity">Illiquidity</h3><p>During the period mentioned above, staked ETH will be non-transferable and illiquid.</p><p>Even after transactions are enabled on ETH 2.0 and it becomes possible to unstake ETH, ETH that is staked will remain illiquid for the period of time it is staked.</p><p>This presents an interesting dilemma — adversarial incentives between securing the network through staking and participating in DeFi are introduced. Users will have to choose between the rewards offered from staking or the yield offered from DeFi protocols.</p><p>This has been best described by Tarun from Gauntlet in his research on <a href="https://assets.pubpub.org/uegr5e8g/61581338612941.pdf">competitive equilibria between staking and on-chain lending</a> and Haseeb from Dragonfly in <a href="https://medium.com/dragonfly-research/how-defi-cannibalizes-pos-security-84b146f00697">his commentary on the paper</a>. </p><h3 id="staking-32-eth-multiples">Staking 32 ETH multiples</h3><p>Finally, some users may face an additional issue with the requirement to stake multiples of 32 ETH. </p><p>At the time of this post, a user would need to stake no less than $11,744.32 in order to participate in securing the Ethereum network under ETH 2.0.</p><p>People that own 5 ETH and want to participate in staking will not be able to do so alone. Equally, people who own 45 ETH will only be able to stake 32 ETH from their holding.<br></p><h2 id="so-why-lido">So… why Lido?</h2><figure class="kg-card kg-image-card"><img src="https://lh6.googleusercontent.com/fmoT1hguv0Dhj2T1vOjKGBWzP57IS0h2vrgHsX48tXUxRYQfqLUyTOwaXrYJOTr1NY0aZDoXUiZYW3LbNIRnIZOvnrPweZB0vMblpHeF67DZXfSAdHCXrKvate1fg_MZdoaek8c2" class="kg-image" alt></figure><p>Lido is a staking solution for ETH 2.0 built to solve these problems and backed by several industry-leading staking providers. It makes staked ETH liquid and allows participation with any amount of ETH. </p><p>When using Lido to stake your ETH on the Ethereum beacon chain, users will receive a token (stETH), which represents their ETH on the Ethereum beacon chain on a 1:1 basis. It effectively acts as a bridge bringing ETH 2.0’s staking rewards to ETH 1.0.</p><p>As a user’s staked ETH generates staking rewards from ETH 2.0, the user’s ETH balance on the beacon chain will increase. stETH balances will update correspondingly once per day allowing you to access on ETH 1.0 the value of your staking rewards received on ETH 2.0.</p><p>Users can use stETH in all of the same ways that they can use ETH: sell it, spend it and, since it is compatible to be used in DeFi, use it as collateral for on-chain lending. When transactions are enabled on ETH 2.0, users can also redeem stETH for ETH.</p><p>We believe that stETH will be an important base primitive in DeFi, and a foundational building block for the Ethereum money-lego stack.</p><figure class="kg-card kg-image-card"><img src="https://lh6.googleusercontent.com/7kZAupMVay0spe3J-atYNI8hEUVBxm2QBuL3bWrClTTd4uawgwkrEVA_0Q0KuRKSQoESrQutGwpIB1ICq-CYdjCiUtl-7y9RbZmRZkRC25mFRXwlu4S0wcaLV2Jnh-iq5H23fl20" class="kg-image" alt></figure><p>Lido is intended to remove the adversarial incentives of ETH 2.0 by allowing users to stake their ETH while simultaneously participating in on-chain lending with stETH, thus providing them access to additional yield from other protocols and producing a more secure ETH network.</p><h2 id="what-happens-next">What happens next?</h2><p>It sounds simple, but there is additional nuance. Over the next few weeks p2p.org CTO @<a href="https://twitter.com/_vshapovalov" rel="noopener nofollow">VS</a> will share further blog posts about Lido’s architecture and provide clarity for launch timelines; the code will become open sourced; and the testnet product will become accessible.</p><p>Meanwhile, follow along on <a href="https://twitter.com/lidofinance">Twitter</a> / <a href="https://t.me/lidofinance">Telegram</a> / <a href="https://discord.gg/vgdPfhZ">Discord</a> or if you’d like to help build Lido, you can email <a href="mailto:[email protected]" rel="noopener nofollow">[email protected]</a> and I’ll be in touch.</p><p>Until next time.</p>