'Lido for Solana' was a Lido DAO-governed protocol designed for liquid staking on the Solana blockchain. The stSOL tokens provided liquidity and allowed participation with any amount of SOL.

Overview

Launched in May 2021, 'Lido for Solana' was a Lido DAO-governed protocol designed for liquid staking on the Solana blockchain. Users who staked their SOL tokens with Lido received stSOL tokens, representing their staking position with Lido validators. This system enabled Solana token holders to access liquidity on their staked assets, which they could trade or use as collateral in decentralized finance (DeFi) activities. ^[1]

The stSOL tokens, backed by top staking providers, provided liquidity and allowed participation with any amount of SOL. Users connected their wallets, deposited SOL tokens into the Lido program, and received stSOL tokens, representing their share of the total pool. Lido delegated SOL to validators on the Solana network, accruing rewards that increased the value of stSOL tokens. These tokens could be used like SOL, enabling holders to earn staking rewards and access rewards from integrated platforms such as Saber and Raydium. ^[1]

Lido

Introduced in 2020, Lido (LDO) provides a liquid staking solution for proof-of-stake cryptocurrencies. It facilitates staking for various layer-1 PoS blockchains, including the post-Ethereum Merge consensus layer (formerly Ethereum 2.0), Polygon, Kusama, Solana, and Polkadot. ^[2]

Mechanics

The Lido program collected deposited SOL and released newly minted stSOL to users immediately. Below the surface, the SOL was distributed evenly across validators participating in the Lido Program. As these delegations accrued rewards, the total SOL under pool management increased, boosting the value of stSOL tokens. Governance of the Lido Program fell under the purview of the Lido DAO, which oversaw the selection of validators. ^[1]

One aspect of staking on Solana was the absence of waiting periods for stSOL token issuance. Unlike traditional staking processes, users delegated their SOL without needing additional steps. They could readily trade stSOL for SOL on the market whenever they chose. ^[1]

While withdrawals from Lido for ETH were restricted until the ETH2 chain went live, Lido for Solana allowed staggered withdrawals. These direct withdrawals took a few epochs to complete and were particularly advantageous for large withdrawals to avoid market slippage. However, smaller withdrawals may have made exchanging stSOL for SOL more convenient on a decentralized exchange. ^[1]

Sunsetting

In September 2023, the Lido DAO's Peer-to-Peer (P2P) Validator submitted a proposal discussing the accomplishments, obstacles, and future outlook of Lido's operations on Solana. The team cited financial challenges and minimal fee revenues, suggesting that the Lido DAO either provide backing or shut down 'Lido on Solana.' The voting process began on September 29 and finished on October 6. ^[3][4][5]

“After much discussion and a vote by Lido DAO members, it was decided that the best course of action would be to wind down Lido on Solana. Whilst this decision was difficult in the face of numerous strong relationships across the Solana ecosystem, it was deemed a necessity for the continued success of the broader Lido protocol ecosystem.” - Lido DAO.

The Lido P2P team managed the Solana project since its acquisition from Chorus One in March 2022. Since taking over, they have allocated approximately $700,000 to developing Lido on Solana. However, the project generated only $220,000 in revenue. As a result, according to Mediakov, who authored the proposal, there has been a net loss of $484,000. ^[3][4][5]

On October 16, 2023, 'Lido on Solana' was discontinued and stopped accepting new stakes. Later, in November 2023, node operator off-boarding began. On February 5, 2024, support for the 'Lido on Solana' Frontend concluded, and users can unstake only using the Command Line Interface (CLI). ^[5]