Lido Monthly Report: July 2023

in Ethereum, Reports by Lido

Welcome to the July edition of the Lido Monthly Report, a comprehensive source for insights on all of the latest developments. This report reviews another month of noteworthy metrics, new collaborations, and ongoing developments that highlight the overall performance and progress of the protocol.

 

 

Protocol Performance

In this section, you will find key metrics that offer valuable insights into the overall performance of the protocol over the month of July.

 

 

Additional Notes

  • Total TVL surpassed $15B during July, a level not seen since May 2022. However, the recent decline in the price of ETH caused it to dip below this noteworthy threshold.
  • Despite the activation of ETH withdrawals earlier this year, the protocol has consistently experienced large monthly net inflows of ETH deposits. As a result of this continuous growth, the protocol appears poised to surpass 8M staked ETH next month.
  • The remarkable adoption of the protocol is evident with over 10,000 new stakers opting to use it for the first time. This surge represents more than a 50% increase from last month, further reflecting the protocol's impressive growth and market demand.
  • July incentives included approximately 40 wstETH that were directed to Optimism and stablecoin liquidity venues.

 

 

Treasury Composition

In this section, you will find an overview of the changes in the Lido DAO Treasury over the month of July, emphasising its commitment to transparency.

 

 

Additional Notes

  • This Treasury Composition excludes LDO holdings.
  • Following Lido DAO's decision to convert its Treasury ETH holdings to stETH in June, the stETH holdings have continued to increase throughout July.

 

 

stETH Performance

In this section, you will find key metrics that offer valuable insights into the overall performance of the ETH liquid staking token over the month of July.

 

 

Additional Notes

  • It is important to note that these metrics also include wstETH - the wrapped, non-rebasing version of stETH.
  • Despite the Curve Finance exploit this past week not affecting the stETH-ETH pool, many liquidity providers chose to prudently withdraw their stETH holdings until the matter is resolved.
  • Lending protocols continue to receive an abundance of stETH inflows, as many market participants want to back their loans with LST collateral.
  • The demand for wstETH on L2s continued to surge last month, with Arbitrum and Optimism bridges experiencing increases of 16.58% and 10.23% in wstETH deposits, respectively.

 

 

Governance

In this section, you will find an overview of the noteworthy proposals that emerged from the Research Forum and their progression through the voting process on Snapshot and Aragon.

Despite several vibrant discussions within the Research Forum, it's important to note that there were no proposals that reached the Aragon stage during the month of July. As per the governance voting schedule, the next Aragon vote is only set for 8 August.

 

Snapshot

Among the various Research Forum proposals considered and deliberated upon during the past month, only one proposal was subjected to a Snapshot vote.

  1. Ethereum Node Operator Shortlist: details

In June 2023, following the successful Lido V2 launch, the Lido Node Operator Subgovernance Group (LNOSG) proposed expanding the Lido Ethereum Node Operator in a fifth round - referred to as Wave 5.

As noted in the proposal, the onboarding round for Wave 5 would occur in 2 stages:

  • In Stage 1, the LNOSG reviewed and evaluated 14 applications from strong return applicants, resulting in 2 of these applicants being shortlisted: Launchnodes & SenseiNode.
  • In Stage 2, currently scheduled for the end of August/early September, the evaluation process will continue to shortlist additional Node Operators for inclusion in the Lido on Ethereum protocol.

Stage 1 was rounded up as the LNOSG recommended Launchnodes and SenseiNode for inclusion in the Node Operator Set for Ethereum, which the DAO voted to accept in the snapshot vote which ended July 27th.

Proposal Outcome: Successful ✅

 

 

Community

In this section you will find key community calls, with a special focus on the Node Operator Community Calls, where Lido DAO promotes engagement and discussions within the growing community.

 

NOCC Call #8

The latest Node Operator Community Call covered several important topics:

 

  • Lido DAO contributors shared an update on Wave 5, stating the mainnet onboarding for the successful Stage 1 applicants is scheduled for mid-August. Looking ahead to Stage 2, the LNOSG plans to evaluate 114 applicants over the next five weeks and aims to finalize a shortlist of 7-9 Node Operators by the last week of August.
  • A presentation on the Community Staking risk analysis took place, in which potential risks and vulnerabilities associated with validators were explored to bolster network security. In response, the community proposed the Reputation & Reimbursement mechanism, which aims to reward trustworthy Node Operators. Additionally, they introduced the Bonding Model, allowing community Node Operators to bond ETH as collateral for stability. These proactive safeguards demonstrate Lido DAO's commitment to further enhance the network's security.
  • A presentation by Nethermind emphasized the importance of client diversity. It highlighted how by promoting multiple client implementations, Ethereum gains resilience to implementation bugs and ensures explicit identification of consensus issues through halting finalization. This approach fosters code and decision decentralization, contributing to a more secure and decentralized Ethereum network.
  • Ethereum researcher Justin Drake provided a detailed explanation of the MEV burn concept and highlighted its significant importance. The concept aims to address and mitigate MEV (Maximum Extractable Value) spikes by introducing a mechanism to smooth and redistribute the impact, potentially enhancing the overall stability and fairness of the Ethereum network.

 

For more details, see below for the full call:

 

 

Collaborations

In this section, you will find all the exciting collaborations that have been established in the past month, as leading companies and protocols integrated with the Lido protocol, further expanding the reach and impact of its liquid staking tokens.

 

Integrations

  • Crypto app Wirex started supporting wstETH, allowing for buying, exchanging and borrowing of the token on its platform.
  • OKX officially listed stETH on its exchange, allowing for millions of its users to easily access the liquid staking token.
  • BitDAO has proposed to allocate 40k ETH from its treasury to stETH, which could foster a vibrant LST ecosystem within the Mantle network. Note: the Snapshot vote for this proposal is set to close on 5 August.
  • A successful integration with BitKeep Wallet now provides its users with a convenient way to earn staking rewards directly from their own wallets.
  • Layer3's third Quest showcased the effortless liquid staking of ETH through Phantom wallet, underscoring the Lido protocol's user-friendly integration with one of Solana's most popular wallets.

 

 

Extra

1. The Lido Ecosystem Grants Organization (LEGO) provided an informative round-up Q2 of 2023.

 

2. Lido DAO contributor Isidoros Passadis featured on the Bell Curve podcast to discuss Distributed Validator Technology (DVT) and how it's being implemented in the Staking Router.

 

3. Leading fixed yield protocol Pendle Finance continues to achieve ever-increasing TVL figures, primarily driven by the growth of its stETH pools.

 

4. The collaboration between Lido DAO contributors and Obol Network members resulted in a second successful round of DVT-testing.

 

 

Looking Ahead - August 2023

  • The Ethereum Node Operators Wave 5 update revealed that successful Stage 1 applicants will undergo onboarding in mid-August, while the LNOSG is diligently working towards finalizing a shortlist of 7-9 Node Operators for Stage 2 by the last week of August.
  • Lido DAO contributors have started working on the first Community Staking module for the Staking Router. This is a very exciting endeavour, so be sure to follow Lido DAO on Twitter to keep updated with the latest developments here.
  • The Snapshot vote for the BitDAO / Mantle proposal is reaching its conclusion on 5 August, and if successful, will lead to the allocation of 40k ETH from BitDAO's treasury to stETH in the coming weeks.
  • Mark your calendars for Lido DAO's 9th Node Operator Community Call, tentatively scheduled for the final week of August. Building on the momentum of the previous call with special guests like Justin Drake, this upcoming event promises to be equally insightful, making it a must-attend for all interested participants.
  • Finally, looking back, ETHCC in Paris was an exceptional event for Lido DAO, with valuable interactions at the Lido booth and insightful interviews and talks with contributors. The success of this experience has already ignited excitement for ETHCC 24, where Lido DAO anticipates even greater opportunities.

 

 

Conclusion

As the second edition of the Lido Monthly Report concludes, Lido DAO reflects on another month of achievements and advancements. Exciting updates lie ahead, and the community eagerly looks forward to sharing more milestones on this journey. Stay tuned for further progress as Lido DAO continues to lead the way in liquid staking.

 

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