Lido FAQ

Lido is the name of a family of open-source peer-to-system software tools deployed and functioning on the Ethereum and Polygon blockchain networks. The software enables users to mint transferable utility tokens, which receive rewards linked to the related validation activities of writing data to the blockchain, while the tokens can be used in other on-chain activities.

While each network works differently, generally, the Lido protocols batch user tokens to stake with validators and route the staking packages to network staking contracts. Users mint amounts of stTokens which correspond to the amount of tokens sent as stake and they receive staking rewards. When they unstake, they burn the stToken to initiate the network-specific withdrawal process to withdraw the balance of stake and rewards.

• Lido protocols give the user liquidity - the stTokens are on the execution layer, so they can be transferred. Users receive staking rewards from validation activities but can sell stTokens anytime they want to exit their staking position.
• Participate in DeFi - users can use stTokens as building blocks in DeFi protocols at the same time as getting staking rewards from validating activities.
• Lido protocols are governed by the Lido DAO - this means there is no central point for making decisions, and there is no one person who has access, control, or decision power to define what to do with users’ tokens. All decisions with respect to the protocol are voted up by the DAO, and all LDO holders may vote.
• Uses time-proven node operators. Lido DAO works with experienced node operators, which decreases the likelihood of technical mistakes that could lead to slashing or penalties. Users supply the stake, and the node operators supply the know-how.