Lido: What It Is, How It Works, and Why It Matters in Staking
When you stake Ethereum, you’re helping secure the network and earning rewards—but you used to need 32 ETH and technical know-how to do it. That changed with Lido, a decentralized protocol that lets anyone stake ETH and receive a liquid token called stETH in return. Also known as liquid staking, Lido removes the barriers to earning staking rewards, making Ethereum’s proof-of-stake system accessible to everyone.
Lido isn’t just a tool—it’s an ecosystem. It works by pooling ETH from thousands of users and distributing it across a network of node operators. In return, you get stETH, a token that represents your staked ETH and accrues value over time as rewards are added. This means you can still use stETH in DeFi apps—lend it, trade it, or earn yield—while your original ETH stays locked in the Ethereum network. The LDO token, the governance token behind Lido, lets holders vote on protocol changes, fee structures, and which node operators get trusted. Together, these pieces form a system that balances security, decentralization, and usability.
Why does this matter? Because before Lido, most people couldn’t stake ETH at all. Now, over 20% of all ETH in circulation is staked through Lido. It’s not perfect—there are risks like smart contract bugs or centralization concerns—but it’s the most used staking solution in DeFi. And unlike other platforms that lock your funds, Lido gives you freedom. You’re not stuck waiting for withdrawal periods or paying high fees. You get liquidity, rewards, and control—all in one place.
The posts below cover real-world examples of how Lido fits into the bigger crypto picture: from how stETH behaves in DeFi protocols, to how LDO token holders shape the future of staking, to why some traders prefer Lido over running their own validator. You’ll also find comparisons with other staking services, breakdowns of reward mechanics, and warnings about scams pretending to be Lido. Whether you’re new to staking or just trying to understand why everyone talks about Lido, these guides cut through the noise and show you what actually works.
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- January 23 2025
- Terri DeLange
- 10 Comments