Lido Finance recently made a remarkable decision to shut down its services on multiple public chains, including Polkadot, Solana, and
Polygon, etc., has attracted widespread attention from both inside and outside the community. This decision has raised many questions. How did it get to where it is today?
On October 17, kentie, a community member of Lido Finance, proposed a discussion proposal to shut down services on Polygon, focus Lido's main focus on becoming a native Ethereum liquidity staking service provider, and avoid the risks of a small total locked value (TVL). Although Lido's TVL on Polygon is approximately $86 million, Lido DAO only charges $116,863 in fees per year. In addition, Lido also rewarded Shard Labs with 450,000 LDOs to compensate for its contribution to the decentralized staking of MATIC tokens. According to Shard Labs' proposal, an additional 150,000 LDO tokens will also be issued to Shard Labs to achieve a 4% milestone in the staking MATIC market share, and these two costs total 600,000 LDOs.
However, shutting down these services involves more than just cost issues. For example, Polygon’s technical upgrades on Lido could bring reputational risks. In addition, as Polygon migrates to a new token (POL replaces MATIC) and undergoes a years-long technical architecture reform, there is still great uncertainty about the chain.
Lido’s cooperation with other public chains has not been smooth sailing. Earlier this year, Mixbytes, a smart contract auditing company that had worked with Lido, announced that starting from August 1, Lido would no longer provide technical and development support for Polkadot and Kusama. This decision was due to multiple challenges such as market conditions, protocol growth, capacity limitations, and corporate strategy. Soon after, Solana also became Lido’s next partner, but due to financial losses, P2P Validator proposed a proposal to terminate Lido services on Solana, which was eventually supported by the community. The Arbitrum community has also begun to question Lido, which may bring more challenges to Lido.
Although Ethereum's recent upgrades have made it more efficient, Lido's rapid rise has brought it new challenges. Lido's success has attracted many users, but it has also caused concerns within some communities and industries. Although shutting down other public chain services and focusing on Ethereum is in line with market demand, it may also bring some potential risks. At present, Lido needs to seriously consider how to deal with these challenges to ensure its future sustainable development.
