Lido Staking Goes Cross-Chain via Chainlink CCIP

in Multichain by Lido

Users can now stake their ETH directly on layer 2 (L2) networks and receive wstETH, powered by CCIP’s Programmable Token Transfers.

 

Chainlink’s Cross-Chain Interoperability Protocol (CCIP) is powering Lido’s new Direct Staking rails that enable users to stake their ETH directly from other blockchain networks and receive wstETH, starting with support for Arbitrum, Base, and Optimism. The peripheral smart contract leverages CCIP’s Programmable Token Transfer functionality to abstract away the process of a user transferring and staking ETH on Ethereum, increasing the accessibility and liquidity of wstETH across the multi-chain economy.

 

Direct Staking offers multiple different methods of staking ETH from L2 networks, depending on the cost and speed preferences of users, and is being adopted by various DeFi frontends, including XSwap, OpenOcean, and Interport.

 

What this unlocks: One-step Lido staking from Arbitrum, Base, and Optimism

The core Lido protocol resides on Ethereum mainnet, providing users the ability to tokenize their staked ETH position into a liquid wstETH token, which can then be used across the DeFi economy. As the multi-chain ecosystem has grown, the Lido protocol has made wstETH natively available across a number of L2 networks, where users benefit from reduced transaction costs.

 

However, because wstETH can still only be issued on Ethereum mainnet, it’s difficult for users to mint wstETH using ETH from L2 networks. Holders of ETH on L2 networks looking to stake their ETH must either swap their ETH for wstETH on an exchange and incur slippage, or manually bridge their ETH back to Ethereum mainnet (which may take up to 7 days), stake their ETH in Lido for wstETH, and then manually bridge their wstETH back to the L2 network. 

 

The new Direct Staking rails powered by CCIP compresses all of these steps into a single L2 transaction. 

 

The creation of Direct Staking rails necessitated a cross-chain interoperability solution that could transfer not only tokens cross-chain but also instructions on what to do with those tokens once they arrive on the destination chain. 

 

Chainlink CCIP uniquely unlocks this opportunity as the protocol supports Programmable Token Transfers, enabling tokens and arbitrary data to be transferred cross-chain as a single transaction.

 

By leveraging CCIP’s Programmable Token Transfers, users can now stake their ETH from Arbitrum, Base, or Optimism and receive wstETH in return in a single transaction. Specifically, Lido’s Direct Staking rails enable multiple different methods of staking ETH from L2 networks, depending on the cost and speed preference of users. These include:  

  • Approach 1: The user stakes on the L2, and then the ETH, along with data instructions on what to do with it, is sent to Ethereum via CCIP. A receiving smart contract within Lido’s Direct Staking rails then stake the ETH in Lido’s staking contracts on Ethereum mainnet and the wstETH is bridged to the user’s wallet address on the L2. 
  • Approach 2: The end user stakes ETH on the L2 to receive wstETH from the liquidity pool. This is achieved by using the exchange rate feed to report the Lido protocol’s internal exchange rate for wstETH on that L2. Once the ETH deposited by the user on the L2 is sent to Ethereum via CCIP along with the instructions to stake, the wstETH is then bridged back to L2 to replenish the pool. 

 

This method of acquiring wstETH on L2 networks complements existing methods and does not require any changes to the core Lido protocol or wstETH token deployments. Lido’s Direct Staking is also extensible to any L2 or alternative layer-1 network. For more information on how CCIP enables cross-chain staking, read this Chainlink blog on scaling staking protocols cross-chain. 

 

Lido contributor selected Chainlink CCIP because it is designed with defense-in-depth security and is powered by Chainlink’s industry-standard decentralized oracle networks, which have a proven history of securing tens of billions of dollars and facilitating over $16 trillion in onchain transaction value. It is the only blockchain interoperability solution with level-5 cross-chain security, featuring additional layers of protection through the Risk Management Network. This first-of-its-kind innovation is uniquely capable of supporting a secure and scalable cross-chain DeFi ecosystem. 

 

In addition to CCIP, Lido’s Direct Staking also leverages data and compute services provided by the Chainlink platform. Chainlink Data Feeds accurately and reliably provide the wstETH exchange rate, which determines the redemption rate that wstETH can be redeemed for ETH, while Chainlink Automation helps Lido manage liquidity by batching cross-chain ETH transfers at preset intervals.

 

“With Chainlink CCIP’s Programmable Token Transfers, Lido’s Direct Staking simplifies staking across Layer 2 networks, improving liquidity for wstETH and enhancing cross-chain interoperability. This aligns with Lido’s mission to democratize staking by making liquid staking more accessible, while maintaining decentralization and advancing the broader DeFi ecosystem." — Jakov Buratović, Master of DeFi, Lido.

 

“It’s great to see Chainlink CCIP’s Programmable Token Transfers unlocking a one-step connection to staking for Lido on Arbitrum, Base, and Optimism, enabling users to easily access the benefits of LSTs in low-fee, fast-execution environments. LSTs have become an important part of the DeFi economy and making them more easily accessible across the multi-chain landscape through the use of CCIP will help grow the onchain economy.”—Johann Eid, Chief Business Officer at Chainlink Labs.

 

About Lido

Lido is an open-source, liquid staking middleware, providing a simple way to earn rewards using your digital assets. With a mission to democratize staking, the Lido middleware connects node operators and users by allowing users to self-stake their digital assets without the need to maintain hardware. Lido empowers users to self-mint liquid staking tokens which they can freely use across the DeFi ecosystem. Learn more: lido.fi

 

Chainlink is the universal platform for pioneering the future of global markets onchain. Chainlink has enabled over $16 trillion in transaction value by providing financial institutions, startups, and developers worldwide with access to real-world data, offchain computation, and secure cross-chain interoperability across any blockchain. Chainlink powers verifiable applications and high-integrity markets for banking, DeFi, global trade, gaming, and other major sectors. Learn more about Chainlink by visiting chain.link or reading the developer documentation at docs.chain.link.

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