Lido Ends Polygon Operations, Refocuses on Ethereum

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As a seasoned crypto investor with years of experience navigating the dynamic landscape of blockchain technology, I find myself reflecting on Lido Finance’s decision to wind down operations on the Polygon network. While I understand the challenges faced by Lido, such as resource-intensive maintenance, insufficient rewards, and a shifting DeFi landscape, it’s always a bit disheartening to see a major player like Lido exit a promising ecosystem.

Lido Finance, the most significant liquid staking platform in the world of decentralized finance (DeFi), is planning to shut down its operations on the Polygon network. This decision comes as a result of low user engagement and a shift in focus towards Ethereum, which is a strategic move for them. The call for this change was made by Lido DAO Token (LDO) holders following discussions within the DAO forum and an affirmative vote from 99% of the community participants who supported the proposal.

Following a November vote, two possibilities were under consideration: either departing from Polygon or reexamining the financial aspects of the middleware. The decision to wind down is based on difficulties Lido encountered while using Polygon, such as demanding maintenance tasks, meager rewards, and the evolving DeFi scene, particularly the growing emphasis on zkEVM (zero-knowledge Ethereum Virtual Machine) solutions.

According to the Lido team, this shift has decreased the need for liquid staking options in Polygon Proof of Stake, impacting Lido’s potential role as a fundamental building block for DeFi on Polygon. Furthermore, it was discovered that other liquid staking solutions were developed within an environment that turned out to be smaller than originally expected.

In 2021, Shard Labs pointed out that the shift in DeFi (Decentralized Finance) towards zkEVM has led to reduced interest in Polygon’s proof-of-stake (PoS) and liquid staking, as these components have become essential parts of other protocols.

Starting December 16th, Lido DAO has ceased accepting new staking requests on the Polygon network. Nevertheless, users can continue to withdraw their staked MATIC tokens via the Lido interface on Polygon up until June 16, 2025. Additionally, all rewards associated with staking have been discontinued.

From January 15th to January 22nd, 2025, the system will temporarily halt all withdrawal operations. After June 16th, 2025, direct support for front-end operations will conclude, and it will only be possible to process withdrawals via web browsing tools.

Key dates for stMATIC holders include:

  • December 16, 2024: Staking on Lido for Polygon discontinued.
  • December 16, 2024 – June 16, 2025: Transition period for withdrawals via the Lido on Polygon UI.
  • January 15-22, 2025: Temporary suspension of withdrawals.

As per DefiLlama’s statistics, Lido Finance currently boasts a Total Value Locked (TVL) of approximately $38 billion as of December 16th, positioning it as the leading liquid staking protocol within the Decentralized Finance (DeFi) sector. Meanwhile, Dune Analytics indicates that Lido has around $45 million worth of tokens staked on the Polygon network, while DefiLlama data reveals that the Polygon network itself has a TVL exceeding $1.2 billion.

On a previous occasion, Lido halted activities on a blockchain network. Specifically, last year the platform terminated its services on the Solana chain after a community decision and due to worries about the chain’s unsustainable finances and low transaction fees. It was back in September 8, 2021 when Lido was introduced on the Solana blockchain.

Lido, after Aave’s suggestion to halt activities on Polygon due to an impending assessment of the risk associated with cross-chain assets, has decided to take similar action. The initiative by Aave’s founder, Marc Zeller, was made on December 13 as a reaction to Polygon’s governance call for the use of a particular bridging methodology.

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2024-12-17 08:04