Lido, a prominent Ethereum staking platform, faces a new challenge in the form of “restaking,” a trend that threatens its position in decentralized finance (DeFi). Controlled by the Lido DAO, Lido has partnered with Mellow Finance and Symbiotic to offer traders access to restaking tools that could boost the popularity of stETH, its liquid staking token. Despite Lido’s status as the largest DeFi protocol on Ethereum with $27 billion in deposits, its dominance has waned as users shift assets to newer services like EigenLayer for additional rewards.
To address the threats posed by restaking, Lido launched The Lido Alliance, a group dedicated to safeguarding the role of stETH in Ethereum DeFi. The alliance’s strategy, reGOOSE, aims to counter the risks associated with restaking. The recent collaboration with Mellow Finance marks the first step in implementing reGOOSE, offering stETH-centric restaking products that could shape Lido’s future direction.
Mellow Finance provides liquid restaking vaults that allow users to deposit assets like stETH for extra interest. Unlike traditional restaking protocols, Mellow offers a permissionless approach that empowers users to distribute their deposits based on individual risk preferences. Lido Alliance members, including Steakhouse and P2P Validator, are introducing stETH-accepting vaults to support Mellow’s initiative. Rewards earned from the vaults are currently in the form of points, with potential ties to future token airdrops.
Symbiotic, an emerging player in restaking, is at the core of Mellow Finance’s vault infrastructure. With backing from Paradigm and cyber•fund, Symbiotic stands out for its versatile approach to accepting various crypto assets under Ethereum’s ERC-20 standard. This partnership indicates a strategic move away from EigenLayer, which has imposed limits on stETH deposits and eroded Lido’s market share. Competing restaking platforms like Symbiotic could pose a challenge to EigenLayer’s dominance in the space.
The shift towards stETH-centric restaking solutions highlights the asset’s appeal as collateral for liquidity provision. Adcv, a key figure in the Lido DAO, believes that stETH’s network effects and liquidity make it an ideal choice for restaking activities. As the DeFi landscape evolves, other platforms may also recognize stETH’s potential as primary collateral, further solidifying its position in the ecosystem. With the rise of competition in the restaking space, EigenLayer may face increased pressure to adapt and remain competitive in the market.
Overall, Lido’s collaboration with Mellow Finance and endorsement of stETH-based restaking solutions mark a pivotal moment in the platform’s evolution. The adoption of innovative strategies like reGOOSE and partnerships with emerging players like Symbiotic signify Lido’s commitment to navigating the changing DeFi landscape. By embracing new trends and technologies, Lido aims to reinforce its position as a leader in Ethereum staking and maintain its relevance within the decentralized finance ecosystem.
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