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Cryptogambling / Lido ceases operations on Solana following community vote

Lido ceases operations on Solana following community vote

Publish Date: 17/10/2023
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The decentralized autonomous organization of Lido Finance, a decentralized liquid staking protocol, voted in favor of ending its operations on the Solana blockchain. The decision was proposed by Lido’s peer-to-peer team, citing high business costs and low profits.

Lido on Solana is a liquid staking solution for SOL that lets users earn SOL staking rewards without the need to maintain infrastructure. It also enables users to trade staked positions and participate in on-chain decentralized finance with their staked assets.

The decision was announced on October 16 on Lido’s blog following a community vote from September 19 to September 29. Prior to the vote, the DAO board had already engaged in lengthy conversations and gained approval from various stakeholders.

Posting the blog announcement on X (formerly Twitter), Lido detailed the timeline of Lido on Solana’s shutdown. As of October 16, SOL staking on Lido will be discontinued, and new stakes will not be accepted. The node operator withdrawal is scheduled for November 17, while front-end support will conclude by February 4, 2024.

Users are advised to unstake their funds prior to February 4. After this point, unstaking will only be feasible via the Command Line Interface, according to the blog post. Information on the protocol’s website shows that the unstaking process might take as much as three days to complete.

Operating on Solana results in losses for Lido

Lido’s P2P team ran the Lido on Solana project after acquiring it from institutional staking provider Chorus One in March 2022. Since then, the team has invested $700,000 and made only $220,000 in revenue, resulting in a net loss of $484,000.

In a September 4 funding proposal, the team predicted that their initial objectives would not be achievable within 2023–2024 without marketing assistance. Therefore, they put forward a proposal to the Lido DAO community that asked for $1.5 million in financial support to improve Lido’s customer support, development and partnerships.

Should the funding be unavailable, the team proposed that a sunset process could begin. To support the technical maintenance necessary for terminating operations on Solana during the next five months, Lido DAO requested $20,000 in monthly financial support.

According to open-source voting platform Snapshot, the vote result showed that 92.7 percent of tokenholders favored sunsetting operations on Solana instead.

“Whilst this decision was difficult in the face of numerous strong relationships across the Solana ecosystem, it was deemed a necessity for the continued success of the broader Lido protocol ecosystem,” the announcement reads.

Lido explained that staked-Solana (stSOL) token owners would still obtain network rewards during the shutdown process. As of Tuesday, around $55 million worth of SOL tokens are still on the platform, which is a significant decrease from the April 2022 peak of $440 million.

With Lido being the third largest among Solana protocols, Solana’s Total Value Locked (TVL) plummeted by $100 million on Tuesday to $210. In contrast, Lido witnessed a positive TVL change as it received a seven percent addition.

Lido and other blockchains

Lido’s decision to stop operations on Solana follows a similar decision it made in March to end its staking program on the Polkadot (DOT) and Kusama (KSM) blockchains. The decision was announced on August 1, citing market conditions, protocol growth, limited capacity and priority alignment challenges.

The developers said balancing its Ethereum staking services with Polkadot and Kusama was a challenge, noting that “the balance of priorities often leaned towards Ethereum first [before other networks].”

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