Lido V2 Upgrade Boosts LDO Token and Enhances Liquid Staking: Pros, Cons, and Main Conflict

Ethereum cityscape with Lido V2 upgrade elements, diverse users unstaking stETH, glowing 1:1 ratio, dynamic NFTs reflecting withdrawal requests, soft blockchain background, vibrant yet secure mood, interconnected staking universe, warm light illuminating enhancing features, artistic touch on user experience & innovation.

Lido, a liquid staking giant, recently upgraded to its second version (V2) on Ethereum, boosting its native governance token, LDO, by 10% to $2.15 within the last 24 hours. The upgrade introduces changes that allow users to unstake their stETH and receive ETH at a 1:1 ratio. The unstaking process takes approximately a day for the majority of users, as long as the exit queue on the Beacon chain remains empty. According to a Lido blog post and network explorer Rated, the maximum time for a validator to exit and withdraw from the staking queue stands at 5 days and 14 hours.

An interesting development is the issuance of a Lido-issued non-fungible token (NFT) representing users’ withdrawal requests. Users must first receive the NFT before claiming their ETH rewards, which are then burned. Although these NFTs could be listed for trading on platforms like Blur and Opensea, secondary market activities do not impact the withdrawal process, as stated by Lido marketing lead, Kasper Rasmussen.

Lido currently commands nearly 80% of the market share for liquid staking derivatives on Ethereum, as reported by blockchain analytics firm Nansen. As of now, the staking giant has withdrawn more than 278,000 ETH, ranking as the fourth-largest entity by ETH withdrawals, following major crypto exchanges such as Kraken, Coinbase, and Binance.

The new V2 has undergone nine total audits from various firms, including Statemind and MixBytes, with just one audit from Oxorio still pending. Lido expects this audit to be completed by the end of May. The significance of the change to the V2 system lies in the “derisking of the entire Lido tech stack,” as stated by Kydo, the Vice President of Stanford Blockchain Club. Rasmussen echoed similar sentiments, adding that the recent events prove that it is possible to both enter and exit the staking house, which decreases the overall risk of the staking experience.

As Lido continues to play a significant role in the Ethereum ecosystem, it is important to note the ongoing efforts to improve security and user experience. The introduction of V2 and the utilization of NFTs for the withdrawal process demonstrate a commitment to innovation and protecting investors. While there are potential benefits to these changes, it remains crucial for users to carefully consider the risks and rewards associated with digital asset investments and the ever-evolving landscape of the blockchain and cryptocurrency market.

Source: Coindesk

Sponsored ad