Lido is the largest liquid staking protocol for Ethereum, allowing users to stake any amount of ETH and receive stETH tokens representing their staked position. Launched in 2020, Lido has grown to dominate the liquid staking sector with approximately 47% market share and $29.4 billion in total value locked as of Q4 2025. The protocol eliminates the traditional 32 ETH minimum requirement for Ethereum staking while maintaining full liquidity through tradeable stETH tokens.
The platform addresses a fundamental problem in proof-of-stake networks: capital inefficiency. Traditional Ethereum staking locks assets without the ability to use them elsewhere, forcing users to choose between earning staking rewards and participating in DeFi opportunities. Lido's liquid staking model provides both simultaneously, with stETH earning 2.7% APR in staking rewards while remaining usable across 100+ DeFi integrations including Aave, Curve, and Uniswap.
As of Q4 2025, Lido operates through three distinct node operator modules: the Curated Module with 37 professional operators achieving 98.17% performance, the Simple DVT Module with 322 operators using distributed validator technology achieving 97.52% performance, and the Community Staking Module with over 800 node operators including 183 solo and community stakers. This multi-module approach combines institutional-grade security with progressive decentralization, positioning Lido as both the most liquid and increasingly decentralized staking solution in the Ethereum ecosystem.
What makes Lido's liquid staking different from other protocols?
Lido differentiates itself through scale, liquidity depth, and operational performance. With $29.4 billion TVL compared to Rocket Pool's approximately $728 million, Lido provides significantly deeper liquidity for its stETH token across secondary markets. This liquidity advantage translates to lower slippage when trading stETH and broader acceptance as collateral across DeFi protocols.
The protocol operates with a 10% fee on staking rewards split between node operators and the DAO treasury, while offering competitive 2.7% APR returns as of Q4 2025. Rocket Pool charges a 15% commission but offers greater decentralization through permissionless node operation. Lido's validator set has historically been more centralized with curated operators, though the recent expansion of the Community Staking Module to 5% of protocol stake represents significant progress toward permissionless participation.
Performance metrics favor Lido's curated approach, with the overall validator set achieving 98.12% performance compared to the Ethereum network average of 97.55%. The protocol distributes stake across operators with exceptional geographic diversity and client distribution, with consensus clients spread across multiple implementations to reduce majority client risk. For users prioritizing maximum liquidity and competitive yields, Lido remains the optimal choice, while those emphasizing decentralization may prefer Rocket Pool's fully permissionless model.
How does Lido's staking process work for users?
Staking with Lido requires connecting an Ethereum-compatible wallet to the Lido platform and depositing any amount of ETH. Upon confirmation, users instantly receive stETH tokens at a 1:1 ratio representing their staked position. The stETH balance automatically increases daily through a rebase mechanism that distributes staking rewards proportionally to all holders, eliminating the need for manual claiming.
Behind the scenes, deposited ETH flows into Lido's staking pool and gets allocated to validator nodes operated by the protocol's node operator network. These 800+ operators run Ethereum validator infrastructure, proposing and attesting blocks while earning both consensus layer rewards from validator duties and execution layer rewards from transaction fees and MEV. The protocol aggregates all rewards, deducts the 10% protocol fee, and distributes the remainder to stETH holders through the daily rebase.
Users can exit their position through Lido's withdrawal mechanism, which allows unstaking stETH back to ETH with fulfillment times dependent on the Ethereum exit queue. Alternatively, stETH can be immediately traded on secondary markets like Curve or Balancer, though this may result in slight slippage during periods of market stress. The wrapped version, wstETH, provides a non-rebasing alternative better suited for DeFi protocols that don't support rebasing tokens, with automatic conversion available on the Lido interface.
What blockchain networks does Lido support?
Lido primarily operates on Ethereum mainnet, which accounts for over 99% of the protocol's total value locked. The protocol deployed $29.39 billion of its $29.4 billion TVL on Ethereum as of Q4 2025, making it the undisputed focus of Lido's liquid staking infrastructure. This concentration reflects Ethereum's position as the largest proof-of-stake network and the primary market for institutional and retail staking demand.
Polygon support exists for MATIC staking, though this represents a minimal portion of protocol activity. Lido previously supported Solana liquid staking through stSOL but discontinued this offering in February 2024 to focus resources on Ethereum. The strategic decision to concentrate on Ethereum aligns with the network's $120+ billion in total staked ETH and the deepest DeFi ecosystem for stETH integration.
The wrapped stETH token has achieved broad multi-chain presence through official bridge partnerships, with wstETH available on layer-2 networks including Arbitrum, Optimism, Base, Scroll, Linea, Mantle, and zkSync Era. These bridged versions maintain their value accrual from Ethereum mainnet staking while enabling usage in layer-2 DeFi applications with significantly lower transaction costs. As of Q4 2025, the Network Expansion Committee and Lido Ecosystem Foundation manage these bridge partnerships, with Chainlink CCIP recently adopted as the official default cross-chain infrastructure.
What are Lido's fees and actual staking costs?
Lido charges a 10% protocol fee on all staking rewards earned, split between node operators who receive 5% and the Lido DAO treasury which receives the remaining 5%. For a user earning the current 2.7% gross APR, this translates to approximately 0.27% annually going to fees, with the user retaining 2.43% net APR on their staked ETH.
The Community Staking Module operates with reduced fees to incentivize home stakers. Permissionless CSM node operators receive 3.5% of rewards, while Identified Community Stakers receive 5% for their first 16 validators and 3.5% thereafter, implemented through the CSM v2 upgrade that launched in October 2025. This tiered structure balances support for individual home stakers with competitive economics as they scale operations.
Network gas fees represent the primary variable cost when interacting with Lido. Staking ETH and receiving stETH typically costs $15-50 in gas during peak Ethereum network congestion, though fees can drop to $5-10 during off-peak periods. Unstaking through the withdrawal queue incurs similar gas costs. Users can minimize expenses by using stETH on layer-2 networks where transaction costs average $0.10-2.00, or by timing mainnet transactions during lower congestion periods visible on services like Etherscan Gas Tracker.
Has Lido been audited and is it secure?
Lido maintains industry-leading security practices with multiple audits completed by top-tier firms. The protocol smart contracts have undergone comprehensive audits, with all code open-sourced on GitHub for continuous peer review by the developer community. Lido operates a bug bounty program through Immunefi offering up to $2,000,000 for critical vulnerability discoveries, with a recent competition adding a $100,000 bonus pool for valid findings on the Dual Governance system.
The protocol has maintained a clean security record since its 2020 launch with no major hacks or exploits resulting in user fund loss. This track record spans over four years of operation across multiple market cycles and periods of extreme network stress. The multi-operator model provides additional security by distributing stake across 800+ validators with heterogeneous setups, reducing single points of failure compared to centralized staking services.
Slashing risk mitigation operates through careful node operator selection and performance monitoring. The Curated Module operators undergo rigorous vetting and must meet strict performance standards, contributing to the 98.17% module performance rate that exceeds network averages. The protocol maintains a slashing insurance fund paid from protocol fees to cover potential validator penalties, though this would not protect against catastrophic widespread slashing events. Users should understand that while Lido has implemented extensive protections, staking inherently carries smart contract risk, slashing risk, and potential stETH price volatility versus ETH.
Who should use Lido for Ethereum staking?
Lido excels for retail stakers with less than 32 ETH who want exposure to Ethereum staking rewards without running validator infrastructure. Users can stake any amount starting from 0.01 ETH, making it accessible for investors with $30-30,000 to deploy. The instant liquidity through stETH allows these users to maintain optionality, using their staked position as collateral in lending protocols like Aave or providing liquidity on Curve while continuing to earn staking rewards.
DeFi-active users represent Lido's core demographic, with stETH integrated into 100+ protocols as of Q4 2025. Strategies include depositing stETH on Aave to borrow stablecoins against it, providing liquidity to the stETH/ETH Curve pool to earn trading fees plus CRV incentives, or using wstETH in yield aggregator vaults like the recently launched stRATEGY vault offering 35.9% APY. These composability options create leveraged yield opportunities unavailable through traditional staking.
Institutional investors increasingly adopt Lido through professional custody solutions like Hex Trust and purpose-built Lido V3 stVaults that launched in 2025. These institutional offerings provide customizable staking configurations with embedded compliance frameworks and integration with major custodians. The Lido GGV vault with $108.7 million TVL and DVV vault with $60.8 million TVL demonstrate institutional appetite for liquid staking with added features like MEV rewards smoothing and leveraged strategies.
What are the real risks of using Lido?
Smart contract risk represents the primary technical vulnerability despite Lido's extensive audits and clean track record. The protocol's smart contracts control over $29 billion in user funds, making them an attractive target for sophisticated attackers. While multiple audits reduce this risk, no smart contract system can be considered completely immune to undiscovered vulnerabilities. A critical exploit could potentially result in partial or total loss of staked funds before mitigation measures take effect.
Slashing risk exists through Lido's validator network, with Ethereum's consensus mechanism penalizing validators up to 100% of their stake for severe infractions like double-signing or prolonged downtime. Lido mitigates this through geographic and client diversity, professional operators, and insurance reserves, but mass slashing remains theoretically possible. The protocol's slashing history shows minimal incidents due to operator quality, with performance consistently exceeding network averages, though past performance doesn't guarantee future results.
Centralization concerns persist despite recent decentralization progress through the Community Staking Module. As of Q4 2025, Lido controls approximately 29% of all staked ETH on Ethereum, raising questions about network-level validator concentration. The protocol's Dual Governance system launched in 2025 allows stETH holders to veto malicious governance decisions by LDO token holders, providing a check on governance power. However, critics argue that liquid staking dominance by any single protocol creates systemic risks to Ethereum's censorship resistance and credible neutrality.
StETH price depeg risk manifests during periods of extreme market stress when stETH may trade below its underlying ETH value on secondary markets. This occurred briefly during the 2022 market turbulence when stETH traded as low as 0.93 ETH despite full backing. While the implementation of Ethereum withdrawals in 2023 largely eliminated sustained depegs by providing a redemption mechanism, temporary liquidity crunches can still create selling pressure. Users requiring immediate liquidity should account for potential 1-3% slippage during volatile periods versus waiting for the withdrawal queue.