Lido to Allow ETH to be Staked on Ethereum 2.0 and Still Participate in DeFi


Ethereum 2.0 is getting ready for first big steps; in the next few weeks, it will begin its transition to proof of stake (PoS) by launching Phase 0 to allow people to stake their ETH.

But it comes with the caveat that the staked ETH will remain unlocked for months or years until transactions are enabled on ETH 2.0. It further means, these stakes ETH, which can only be in the multiple of 32 (worth about $11,850 at the time of writing), can’t be moved, traded, or used as collateral.

To allow people to secure the network through staking and participate in DeFi simultaneously, Lido is launched. Currently, in development, this project is headed by CEO Jordan Fish and CTO Vasiliy Shapovalov, with more details to come over the next few weeks.

This staking solution for Eth 2.0 is built to solve the issue of staked ETH being non-transferable and illiquid.

When using Lido to stake ETH on the Ethereum beacon chain, users will receive a token called bETH, representing ETH on the Ethereum beacon chain on a 1:1 basis.

Staking rewards earned from staked ETH will reflect the user's ETH balance on the beacon chain, and so will the bETH balances.

“We believe that bETH will be an important base primitive in DeFi, and a foundational building block for the Ethereum money-lego stack,” reads the official announcement.

In this manner, ETH users can earn incentives through staking and simultaneously getting access to additional yield by participating in DeFi protocols.

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