In a series of tweets made by Lido Finance [LDO] on 6 October, the leading Ethereum [ETH] staking platform confirmed the launch of ETH staking on layer two scaling solutions with token bridging to Arbitrum One and Optimism.
Lido is now on L2 🏝️
Bridge your staked ETH to Layer 2 protocols at the click of a button to benefit from lower gas fees and exciting DeFi opportunities.
— Lido (@LidoFinance) October 6, 2022
In July, Lido Finance hinted at this movement when the team noted that the staking platform was “committed to making Lido’s staked-asset tokens widely available throughout Ethereum Layer 2 as it evolves.”
According to Lido Finance, the first phase of its layer two roll-out will enable its users directly bridge wrapped stETH (wstETH) to Arbitrum One and Optimism to preserve “the unique properties of stETH in the process.”
It added that wstETH was selected as a token of choice to allow for ease of integration across existing decentralized finance protocols.
In addition, the ETH staking platform intends to allocate 150,000 LDO tokens in rewards per month from 7 October for wstETH across each network.
This will take the form of liquidity mining incentives on DeFi partners such as Kyber Network, Curve Finance, and Balancer to build wstETH liquidity.
Uneasy lies the head
According to data from blockchain analytics platform Glassnode, with 4.2 million ETH staked through Lido Finance, the staking platform holds 30% of the entire ETH staking market share.
It is immediately followed by Coinbase, the centralized cryptocurrency exchange through which 1.93 million ETH coins have been staked.
It is worth noting that the exchange had an early start with ETH staking as far back as November 2020. Lido launched a month later, in December 2020, a few weeks after the Ethereum 2.0 Beacon Chain went live, and soon became a force to be reckoned with.
With the year so far marked by a series of market-wrenching events, most especially the collapse of Terra, Lido’s total value locked (TVL) suffered severely following the depegging of TerraClassicUSD (USTC).
According to data from DefiLlama, Lido’s TVL was at a high of $18 billion prior to USTC’s collapse. However, at $6.19 billion at press time, Lido’s TVL has dropped by 66% since May.
That being said, the highly anticipated Ethereum merge happened on 15 September. Unexpectedly, the hype that surrounded the merge failed to result in any significant rally in the price of the ETH token.
Impacted by this, data from CoinMarketCap showed that the price of LDO has declined by 17% since the merge took place.