As an analyst with years of experience navigating the dynamic world of blockchain and decentralized finance (DeFi), I find myself reflecting on Lido’s decision to exit Polygon, a move that seems to be gaining momentum in the DeFi ecosystem.
Lido, a well-known liquid staking platform, has announced that it will no longer support its liquid staking protocol on Polygon. This move marks the winding down of operations for Lido over the next few months. After thorough discussions in the DAO forum and a community vote, Lido token holders have agreed to gradually phase out Lido from Polygon.
The process is set to begin shortly.
Lido’s Exit from Polygon
First introduced in 2021 by Shard Labs, Lido on Polygon encountered difficulties including low user adoption, inadequate rewards, and excessive resource upkeep, as mentioned in the official blog post. Furthermore, the rapidly advancing DeFi market, particularly the increasing interest in zkEVM solutions, has diminished the need for liquid staking within Polygon’s Proof of Stake system, which has made it challenging for Lido to establish itself as a cornerstone of the DeFi ecosystem.
Due to Lido’s emphasis on Ethereum, as detailed in their governance plans like GOOSE and reGOOSE, these factors ultimately influenced the reassessment and subsequent termination of Lido’s presence on the Polygon network.
For those holding stMATIC, it’s important to understand that the phasing out process has significant implications. This means that rewards will temporarily stop being distributed during this transition period. Additionally, there is a planned operational pause scheduled from January 15-22, 2025, during which no withdrawal requests will be processed.
Please make sure to withdraw your MATIC tokens from Lido on the Polygon interface prior to June 16, 2025. Beyond this date, the front-end assistance will no longer be available, and you’ll need to use blockchain explorer tools for any future withdrawals.
Starting on December 16, 2024, we won’t accept any new staking. Over the next six months, from December 16, 2024, to June 16, 2025, we’ll have a withdrawal period in place to ensure a seamless transition for our users.
Previously, Lido paused its activities within the Solana network about a year ago. The halt was due to a collective decision from the community, with financial viability concerns and insufficient fees being the primary factors mentioned. It’s important to note that Lido first entered the Solana ecosystem on September 8, 2021.
Setbacks for Polygon Ecosystem
Lido has chosen to scale back on Polygon following Aave’s decision to halt operations. This move by Aave was suggested by its founder, Marc Zeller, on December 13, as a reaction to a governance request from Polygon concerning a new linking system. The proposal sparked worries about the risk level of assets linked through this mechanism.
In a related development, liquid restaking protocol Swell announced that its Layer 2 is migrating to the Optimism Superchain, moving away from the Polygon Chain Development Kit (CDK) as part of this transition in October.
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2024-12-17 19:20