Lido Finance offers staking strategies for blockchains such as Ethereum, Solana, Polygon, Polkadot and Kusama. These strategies are based on liquid staking.

Liquid Staking

Liquid Staking is Lido's primary service, which allows users to stake their assets and receive st[token] in return. These tokens represent a share of the total asset being staked by Lido, and can be freely traded and transferred.

Currently, the staking service is available for five tokens:

• ETH (Ethereum)
• SOL (Solana Network)
• MATIC (Polygon Network)
• DOT (Polkatot Network)
• KSM (Kusama Network)

Staking possibilities

Annual percentage rate (APR) rewards are different and vary according to each asset chosen to stake. The highest APR is on the Kusama network (17.1%) and the lowest is on the Ethereum network (5.1%) as of March, 2023.

Current APR

On Ethereum, it is possible to stake any amount of ETH and receive daily stake rewards. While there is no way to withdraw ETH from staking (until the Ethereum Shanghai upgrade takes place), stETH holders may exchange their stETH for ETH in liquidity pools such as Curve or Balancer, or use their stETH across other DeFi ecosystems integrated with Lido.

Solana stakers in Lido can use their stSOL in liquidity mining pools such as “stSOL + SOL”, “stSOL + USDT” and so on in different pools in order to grow their asset base. It is also possible to explore apps and services using stSOL in the Solana ecosystem.

In Liquid Polygon Staking, the native Polygon coin MATIC is staked and stMATIC is received in exchange. Daily staking rewards stMATIC can be put into DeFi to work across the Polygon ecosystems.

With Liquid Polkadot Staking, you stake xcDOT and receive stDOT in exchange. Then, you get your daily staking rewards and put your stDOT to work across the Polkadot and Moonbeam ecosystems.

DOT is Polkadot's native token, but it is not an ERC-20 token and cannot be used by Moonbeam parachain users. To get around this, xcDOT comes into play. xcDOT is an ERC-20 compatible token on the Moonbeam network, which can be received by users in exchange for DOT. A DOT holder locks their DOT on Polkadot and gets the same amount of xcDOT in their Moonbeam account, by using the Transfer tab.

For Kusama stakers, staking in Lido Finance is more convenient and user-friendly compared with traditional Kusama staking, for several reasons. First, the process is simplified to a one-step deposit, making it easier for users who are not familiar with the technicalities of staking to participate. In contrast, traditional Kusama staking requires the user to manually create a Stash Account, bond KSM to it, and nominate validators, which can be a complex and time-consuming process.

While Liquid Staking can offer many benefits, such as providing liquidity while earning staking rewards, there are also some potential risks that should be considered, including:

1. Smart contract risk: Liquid Staking involves the use of smart contracts, which are subject to potential bugs or security vulnerabilities. If a smart contract is compromised, it could lead to loss of funds for the stakers
2. Counterparty risk: when staking through Lido or other Liquid Staking solutions, users are entrusting their funds to a third party - in this case, the staking provider. There is a risk that the staking provider could suffer a hack, insolvency or act maliciously, which could lead to a loss of funds
3. Slashing risk: staking on Ethereum involves the possibility of being "slashed" if validators act maliciously or do not follow the rules of the network. If a validator is slashed, it can result in a loss of staked funds
4. Liquidity risk: while Liquid Staking allows for liquidity, it is important to note that there is no guarantee that stETH tokens will always be liquid or tradable. A decrease in liquidity could lead to difficulties in trading stETH tokens
5. Depeg risk: there could be the potential risk of a depeg of stETH occurring due to market volatility, liquidity issues, and market demand fluctuations, which could result in stETH holders facing losses if the token's price significantly deviates from the price of ETH

It's important to note that Lido Finance has measures in place to mitigate these risks. For example, they use a decentralized network of validators and a smart contract that has undergone extensive audits to reduce the risk of hacking or other security issues. Also, they provide an Insurance fund that can cover most of the slashing risks. You can read more about risk scenarios here. However, it is important for users to be aware of these risks and make informed decisions when participating in Liquid Staking.

Another Lido’s service; is taking care of validator diversification, which can be challenging for individual stakers to manage. In traditional Kusama staking, stakers must monitor validator yield and switch nominations if a validator is not performing well. With Lido Finance, stakers can trust the platform to select and manage validators on their behalf.

Integrations

Lido also provides integrations with various DeFi protocols, such as Curve, Yearn Finance, and Balancer, allowing users to easily move between different DeFi applications while still earning staking rewards. With this service, Lido empowers stakers to put their staked tokens to use and explore apps and services integrated with the protocol.

There are several risks associated with using Lido's integrations with various DeFi protocols, including:

1. Smart contract risk: DeFi protocols rely on smart contracts, which are programs stored on the blockchain. These smart contracts are subject to vulnerabilities and bugs that can be exploited by attackers, potentially resulting in loss of funds
2. Liquidity risk: some DeFi protocols may have limited liquidity, meaning there may not be enough buyers and sellers to execute trades at a fair price. This can lead to price slippage, which can result in unexpected losses
3. Market risk: like any investment, DeFi protocols are subject to market risk, meaning that the value of the tokens being staked can rise or fall based on market conditions. This can result in the loss of the staker's original investment

Integrations

It is important to understand these risks and carefully consider them before using Lido's integrations or any other DeFi protocols.

Lido Finance stands out from its centralized competitors such as Coinbase, Kraken, and Binance in several notable ways. Firstly, it offers a decentralized staking service, which means that users can stake their crypto assets in a non-custodial and decentralized way. This makes it a more secure and reliable option, as users have full control over their assets, and there is no risk of losing all their assets in case of a security breach on the exchange.

Lido Finance's liquid self-staking service is an innovative solution that allows users to stake their ETH without having to deal with the technical complexities and minimum requirements of traditional staking services.

The protocol offers an easy-to-use platform on which users can stake any amount of ETH, even small amounts, and receive liquid stETH tokens in return, which represent their staked ETH and can be traded or used for other purposes.

On the other hand, when comparing Lido to its competitor, Rocketpool, there are some key differences in the operating models and DeFi integrations. Lido currently has 28 validators, while Rocketpool has more than 2,000. The Lido Node Operator set is permissioned, meaning the DAO selects which Node Operators can validate for Lido. Lido's stETH also has deeper liquidity and supports more DeFi integrations than Rocketpool's rETH. Kraken, another competitor, locks users’ ETH, unlike Lido, which is a major advantage for users.

Overall, Lido Finance offers a better staking service with an easy-to-use interface, reasonable fees, generous referral rewards, liquidity for many cryptocurrencies, and support from major players in DeFi. Its liquid staking model allows users to stake their tokens and use them in the DeFi ecosystem, while still earning yield on their staked ETH.

Lido has a strong track record of security and reliability. The platform is audited by reputable third-party firms and has a transparent and open-source code. The protocol is also supported by a network of professional validators, who ensure the safety and stability of the platform.

Staking through Lido Finance offers immediate appreciation, meaning users start earning staking rewards from the moment they deposit.

Overall, Lido Finance offers a more user-friendly and convenient staking experience for stakers who want to earn staking rewards, but who do not have the technical expertise or time to manage staking on their own.

Lido Finance simplifies the staking process by offering a user-friendly, one-click deposit process and managing the validator selection and diversification on behalf of stakers.

Lido Finance's decentralized, liquid self-staking service provides users with more control, higher rewards, and greater security than traditional staking services. If you're looking for a reliable and user-friendly staking platform, Lido Finance is definitely worth considering.