Overview
Lido is a liquid staking protocol that lets users stake ETH while receiving stETH tokens that remain usable across DeFi applications. Launched in December 2020 with the LDO token, it became the dominant liquid staking provider for Ethereum. Staked funds are managed by a distributed set of node operators, and stETH accrues rewards over time.
How It Works
A user deposits ETH into Lido and receives stETH, which represents their staked position. Lido routes the deposits to a curated set of node operators who run validators, and staking rewards accrue to the stETH balance daily. Because stETH trades in DeFi markets, users can use it as collateral, lend it, or swap it, while their underlying ETH remains staked and earning.
Why It Matters
Lido made staking accessible without running infrastructure and unlocked the capital efficiency of liquid staking, which is foundational to the DeFi and restaking stacks. Its scale also raised concerns about concentration: a large share of ETH staked through one protocol concentrates control over the consensus layer. Understanding Lido means weighing its convenience against its centralization footprint.
Related Concepts
Lido is the primary example of Liquid Staking and the source of stETH, a key input to Restaking via EigenLayer. It relies on Validators and node operators, and its yield feeds into DeFi strategies tracked by tools like DefiLlama.