Lido Aims To End Polygon Project After Halting Solana Staking

According to a recent report, the Lido community has put forth a proposal to discontinue its involvement in the Polygon network, citing a series of challenges and uncertainties. The decision reflects a growing trend of crypto projects reassessing their positions in the ever-evolving blockchain landscape.

Meanwhile, the proposal comes after Lido Finance, the decentralized liquid staking leader, announced recently that it will no longer accept new staking requests for Solana (SOL) tokens. This decision comes as a result of a significant majority vote by Lido’s LDO token holders in favor of halting the service.

Notably, new users can no longer stake SOL on Lido, and by February 2024, the platform’s front end will also discontinue the ability to unstake existing tokens.

Why Lido Aims To Discontinue Its Services On Polygon?

The Lido community expressed concerns over the lackluster financial performance of its presence on Polygon. The proposal showed that despite a total value locked (TVL) of approximately 151 million MATIC or equivalent to $86 million, the revenue generated was deemed insufficient.

Meanwhile, calculations revealed that the fees collected by Lido DAO amounted to just $166,863 per year. This figure was eclipsed by the substantial incentives offered to Shard Labs to meet staking market goals, resulting in an unimpressive return on investment. Over the past year, Lido expended over 2.1 million LDO, or about $3.4 million to achieve this meager revenue.

In addition, the Lido on Polygon went through a technical upgrade that inadvertently introduced a bug, preventing withdrawals for 25 days remains a significant concern. While no major issues arose during this period, it raised concerns about the protocol’s reputation, especially considering the significant assets it manages, amounting to $15 billion. Notably, the Lido community recognized the importance of safeguarding its brand image in the cryptocurrency space.

Also Read: Altcoins Could Be In the Last Phase of the Crypto Bear Market, Here’s Why

Recent Uncertainties & Competition

The rapidly evolving nature of Polygon’s roadmap has raised concerns in the Lido community. Notably, Polygon’s plan to become a restaking layer and a base layer for new app chains created uncertainty, especially with the emergence of competitors like Eigenlayer.

In addition, Polygon’s migration to a new token and a multi-year technical architecture overhaul added to the complexity and potential risks. Additionally, the lack of competition in the liquid staking provider space on Polygon contrasted starkly with the vibrant staking market on Ethereum.

In light of these challenges and uncertainties, the proposal to discontinue Lido’s presence on Polygon and refocus as a native Ethereum liquid staking provider has gained momentum. The community aims to mitigate risks and explore more promising avenues for growth in the ever-evolving crypto landscape.

However, following the recent proposal, the Lido DAO price declined 3.86% to $1.48, while its volume soared 2.76% to $40.67 million from yesterday.

Also Read: FTX Founder’s Vulgar Messages Exposed in Fraud Trial