Lido is set to discontinue services on Polio in the coming months after low adoption.
Lido, the staking protocol, says it is slowing operations on the Polygon network due to limited user adoption, ecosystem volatility and its strategic refocus on Ethereum.
In a December 16 blog post, the Lido Finance team stated that the decision was made at the request of Lido DAO Token (LDO) holders, “extensive DAO forum discussion” and after receiving a community vote in which 99% supported the idea.
In the November election, two proposals are considered, one is to leave the polygon and the other is to “re-evaluate the economics of the middle”.
justification
Following extensive discussions on the Lido Dao forum and a governance vote by LDO token holders, the Lido on Polygon sunset process is underway.
A strategic refocus on Ethereum and a lack of scalability at Polygon POS led to a stock break…
— Lido (@LidoFinance) December 16, 2024
According to the team, Lido faces significant challenges at Polygon, such as resource-intensive maintenance requirements, insufficient rewards, and the decentralized finance (DeFi) landscape, particularly “with a focus on zkEVM solutions.”
“This transition has led to a reduction in demand for liquid staging solutions at Polygon POS, which has impacted Lido on Polygon's capacity as a basic DeFi build,” said the Lido Group.
“Additionally, alternative liquid retention solutions have been built into a smaller ecosystem than originally anticipated.”
In the discussion phase prior to the vote, Shard Labs, which proposed to bring staking services to Polygon in 2021, cited Polygon's need for proof-of-stake (PoS) proof-of-stake (PoS) and liquidity as “pushing DFI migration to zkEVM.” As “the construction of other protocols has lost its footing”.
Related: Lido Finance Hits 1M Validators, Fuels DeFi Growth
As of December 16, Lido storage requests will no longer be available at Polygon. However, users can still withdraw their MATIC through the Lido interface on Polygon until June 16, 2025. All prizes are also discontinued.
The protocol temporarily freezes all spending between January 15 and January 22 next year.
On June 16, the Lido team announced that front-end support would end, and extraction would only be possible through browser devices.
Time lines
Key dates to remember for STMATIC containers are:
• December 16, 2024: Arming for Polygon in Lido will be discontinued.• December 16, 2024 – June 16, 2025: Transition period: Withdrawals can be performed in Lido through the Polygon UI. • January 15-22, 2025:…
— Lido (@LidoFinance) December 16, 2024
Lido Finance has a total value locked (TVL) of $38 billion as of December 16, according to Defilama data, and is the largest liquid storage protocol in the DeFi market.
Like Dune, Lido has $45 million in equity tokens on Polygon. Polygon Network has more than $1.2 billion in TVL, according to Defilama data.
Last year, Lido announced that it was suspending operations on the Solana blockchain following a community vote and concerns over unsustainable financial issues and low payments. The protocol was launched on September 8, 2021 on Solana.
Ave, one of the most popular lending protocols on the Polygon network, has proposed a risk profile for assets bridged over the network to stand on Polygon.
Aave chain founder Mark Zeller released the proposal on December 13, saying it was a response to Polygon management's request to farm more than $1 billion in stablecoin reserves on other protocols.
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