What is Lido DAO (LDO)?

The Lido DAO token (LDO) functions as an ERC-20 token within the Lido protocol, designed to incentivize users. With a total supply of 1 billion tokens, it fulfills three main purposes.

LDO bestows governance privileges upon holders within the Lido DAO, enabling participation in decisions concerning Lido node operators' inclusion or exclusion. Additionally, it facilitates the management of fee parameters and their distribution. A user's voting strength increases with the quantity of LDO coins held, making their vote more influential.

Lido DAO is an innovative decentralized autonomous organization offering liquid staking solutions on the Ethereum 2.0 blockchain and other PoS platforms like Solana (SOL), Polygon (MATIC), Polkadot (DOT), and Kusama (KSM).

Through the initial locking of assets, Lido DAO facilitates the conversion of holdings into a liquid state, enabling their use in other protocols—referred to as 'liquid staking'. This process results in users receiving a tokenized equivalent of their staked tokens on a 1:1 basis upon depositing them into the network. These tokens can then participate in additional DeFi on-chain activities, generating extra yields.

What is the history behind Lido DAO?

Established in December 2020, soon after ETH 2.0's launch, the platform has been governed by Lido DAO, with prominent members such as P2P Capital, KR1, and Semantic Ventures. Over time, Lido DAO has gained renown for its liquid staking capabilities, currently managing over $13 billion in staked assets. 

While its primary focus remains on Ethereum, it is expanding its reach to other blockchain networks like Terra and Solana, both of which introduced staking capabilities in 2021, alongside various other layer 1 PoS blockchains.

Lido DAO distinguishes itself from other liquid staking protocols due to its decentralized nature and appealing annual percentage rates (APR). It offers rates of 4.8%, 8.1%, and 6.6% APR for staking Ethereum, Terra, and Solana, respectively.

Who are the founders of the Lido DAO?

Lido was co-founded by Kasper Rasmussen and Jordan Fish, better known as CryptoCobain. Behind the Lido DAO stand various individuals and organizations highly respected in the DeFi domain.

The Lido DAO comprises Semantic VC, Chorus, ParaFi Capital, P2P Capital, Libertus Capital, Terra, StakeFish, Bitscale Capital, StakingFacilities, and KR1 among its members. Distinguished angel investors within this consortium include Stani Kulechov of Aave, Banteg of Yearn, Will Harborne of Deversifi, Julien Bouteloup from Stake Capital, and Kain Warwick from Synthetix.

How does the Lido DAO Protocol function?

The Lido protocol provides liquid staking services enabling users to earn block rewards from staking PoS assets while mitigating concerns related to liquidity, complexity, and centralization. The Lido DAO offers an inventive solution facilitating access to tokens typically locked up, thereby reducing entry barriers and associated staking costs.

Upon staking tokens on the Lido DAO platform, users engage with a staking pool smart contract that stakes the tokens on the relevant PoS blockchain. Additionally, users receive digitized versions of their deposited funds (stAsset tokens) which can garner rewards not only from the original protocol but also from other DeFi protocols and decentralized applications (dApps) like lending and yield farming. This feature empowers users to optimize their potential earnings.

The staking pool smart contract oversees user deposits and withdrawals, establishes staking reward fees, delegates funds to node operators, and generates or eliminates tokens as required.

What are the use cases of Lido DAO Tokens?

Consider ETH as an example. Through Lido staking, participants receive stETH tokens at a 1:1 ratio, representing their deposited ETH. These stETH tokens can be employed like regular ETH, enabling users to earn staking rewards in real-time, updated daily. Lido doesn't impose lock-up periods or minimum deposits.

Lido DAO's liquid staking mechanism encompasses three key steps: staking, minting, and engagement in decentralized finance (DeFi).

• Staking: Users select the amount of ETH to stake, which is then deposited onto the platform.

• Minting: Lido generates, at a 1:1 ratio, stETH tokens or Lido-native liquid representations of ERC-20 coins in exchange for the staked ETH.

• DeFi: Utilizing these stETH tokens across the DeFi ecosystem enables users to earn higher yields without the necessity of locking up their staked coins.

Through the Lido DAO platform, users can stake any quantity of ETH to the Beacon Chain without adhering to customary lock-up prerequisites. Lido charges a 10?efor providing the staked ETH service during each of these processes.

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