<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>
<h3 id="part-1-in-a-4-part-series-expanding-on-the-fundamentals-of-lido-s-steth-token">Part 1 in a 4-part series expanding on the fundamentals of Lido's stETH token</h3><p>Over the following weeks we will be covering all aspects of stETH including the rebasing mechanism, associated risks/benefits, use cases, integrations and the future of staked ether.</p><h2 id="what-is-steth">What is stETH?</h2><p>Users who stake their ETH into the Eth2 contract via Lido will receive the liquid token equivalent in the form of stETH. For the sake of simplicity, this means that if you stake 1 ETH with Lido, you receive 1stETH in return. </p><p>stETH allows users to participate in the DeFi ecosystem - Yearn, Curve, Maker, Aave - whilst still accruing Eth2 rewards earned from staking during Phase 0.</p><p>stETH accrues staking rewards regardless of where it is acquired. This means that regardless of whether you acquire stETH directly from staking via stake.lido.fi, purchase stETH from 1inch or receive it from a friend, it will rebase daily to reflect Ethereum staking rewards.</p><p>This nullifies the downsides from staking into the Eth2 contract directly: illiquidity, immovability, inaccessibility. Instead of locking up your staked ETH, Lido allows you to put it to use so you don’t need to choose between Ethereum staking and DeFi participation.</p><p>More information about this can be found here: <a href="https://blog.lido.fi/introducing-lido/">blog.lido.fi/introducing-lido</a>.</p><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://lh4.googleusercontent.com/0hJvWNaelPIwDjk0hg8eJyT6EvCJC2tEATqY-dytoZ9ml0HVkLKApx4cpBZA8zyhKMqNOaRQea0Ng36Dhqo4RFx6ThNdLpet2ioehcOP2qj8aMkicD5Ko6Xvqjhf8ONYoFy5VNVE" class="kg-image" alt><figcaption>How staking Ethereum with Lido works </figcaption></figure><h2 id="mechanics-of-steth">Mechanics of stETH</h2><p>stETH token balances update once a day when the oracle reports changes in Eth2 deposits and changes in ETH rewards from users who stake via Lido. This occurs once a day at 12PM UTC. Because the rewards are embodied through a balance rebase, users who hold stETH will not see a transaction sent to their wallet. Rather, users should see their stETH balance automatically change without an accompanying transaction taking place. </p><p>This rebase works across integrated DeFi platforms like Curve and Yearn. This means that if you are to stake your stETH across these protocols to earn additional yields, you will continue to benefit from daily stETH staking rewards as well. UniSwap, 1inch and SushiSwap are not designed for rebasable tokens and as a result you risk losing out on a portion of your daily staking rewards through providing stETH as liquidity across these platforms. </p><p>When a user deposits ETH via Lido, that ETH is split between node operators which is then sent to their respective validators.</p><h2 id="the-steth-reward-rate">The stETH Reward Rate</h2><p>Users who stake their ETH with Lido will receive daily rewards - in the form of stETH balance rebases - from day one. This is possible because staking rewards with Lido are socialised across all stakers. Rebases affect all holders of stETH regardless of whether their ETH has actually been deposited into the queue as of yet.</p><p>This mechanism is the reason why the stETH reward rate is currently lower than that of Ethereum. </p><p>Only a portion of Lido validators have made it through the queue, from which all existing stETH holders are accruing their rewards – including the new depositors. This results in an initially lower reward rate because the amount of rewards being accrued from the minority of already accepted validators is being split proportionally towards all stETH holders.</p><p>As more of Lido’s validators are activated, the stETH reward rate will grow correspondingly and gravitate towards the full Ethereum staking rate.</p><p>To track the Eth validator queue, visit <a href="https://eth2-validator-queue.web.app/">eth2-validator-queue.web.app</a>.</p><p>A dashboard to view these validators (and their time in queue alongside their estimated finalizing date) is currently being developed. This dashboard will also display related information such as: number of current validators, rewards being paid out to stETH holders, total amount of ETH staked via Lido, the active number of stakers, Lido APY, Eth2 APY.</p><h2 id="reward-rate-and-active-discussion">Reward rate and active discussion</h2><p>There have been active discussions in the Lido community regarding the initially low reward rate. Some members have discussed the possibility of counteracting or offsetting this low reward rate by distributing LDO tokens to compensate the affected users. </p><p>Some members have discussed other methods through which this can be achieved: emissions/retroactive flat airdrop, locked/unlocked periods, program requirements, etc. </p><p>You can participate in the discussion here: <a href="https://research.lido.fi/t/counteract-currently-low-reward-rate-with-ldo-emissions/194">Counteract Low Reward Rate With LDO Emissions</a>.</p><p>In the meantime, if you would like to earn a greater yield on your stETH, you can provide your stETH – or ETH – as liquidity in the Curve stETH pool to earn the current Lido reward rate, trading fees accrued from the pool, LDO rewards, and CRV rewards simultaneously. </p><p>You can find more information about this here: <a href="https://blog.lido.fi/providing-steth-liquidity-via-curve-to-receive-rewards/">Providing stETH Liquidity Via Curve</a>.</p><p>If you have any ideas you would like to share or any general questions you would like to ask, please post them on the <a href="https://research.lido.fi">Lido DAO forums</a>.</p><h2 id="resources">Resources</h2><ul><li><a href="https://blog.lido.fi/introducing-lido/">Introducing Lido</a></li><li><a href="https://blog.lido.fi/staking-ethereum-with-lido/">Staking Ethereum with Lido</a></li><li><a href="https://blog.lido.fi/how-lidos-validator-choices-help-you-avoid-hostage-eth/">How Lido’s validator choices help you avoid hostage ETH</a></li><li><a href="https://consensys.net/knowledge-base/ethereum-2/faq">Ethereum 2.0 FAQ</a></li></ul>