Apart from allowing users to stake with no minimum quantity of ETH, Lido also supports the usage of staked assets as collateral in DeFi protocols.
Andreessen Horowitz (a16z), an American startup capital firm, has committed to the first funding round of Ethereum staking solution Lido Finance since May 2021. In 2021, the venture capital firm Paradigm led a $73 million fundraising round for Lido. Alameda Research, Digital Currency Group, and Three Arrows Capital are among the other participants in the round. According to a representative for the venture capital firm, the funding will assist Lido in adopting decentralized staking solutions for ETH 2.0.
a16z makes an investment in Lido
A16z has now made a $70 million investment in the liquid staking provider. Users of Lido Finance can simply stake ether and other proof-of-stake (PoS) assets. Notably, the Ethereum blockchain has been intending to transition from the proof-of-work (PoW) method to the proof-of-stake (PoS) mechanism. The PoS validation system consumes less energy than the PoW validation system, and it allows for transaction validation through staking in exchange for rewards. As a result, Ethereum wants to encourage investors of its crypto asset to stake their tokens, which is where Lido Finance comes in. A16z disclosed that it had staked a portion of its Crypto’s ETH assets on the Beacon Chain using Lido. According to the firm, staking with Lido eliminates many of the operational problems that institutional investors face.
When staking ETH, a16z brought out the difficulties of the high barrier for running a node. Users must have at least 32 ETH, which is worth more than $87,000 at the current market price of $2,738.12.
Daren Matsuoka and Porter Smith of a16z Crypto stated after the announcement of its investment in Lido Finance:
“Lido resolves the competitive incentives in DeFi between staking and seeking yield.” Lido, by creating an Ethereum-native liquid token, enables you to utilize staked ETH as collateral within DeFi in the same way that you can currently use ETH.”
Many people choose Lido because it offers ETH staking with no minimum deposits or lockups.
Lido is the market leader in Ethereum liquid staking, accounting for over 80% of the industry. As of now, the platform’s assets are worth more than $10 billion. Konstantin Lomashuk, co-founder of Lido, disclosed that the platform’s assets are linked to around 76,000 individual crypto wallets.
Apart from allowing users to stake with no minimum quantity of ETH, Lido also supports the usage of staked assets as collateral in DeFi protocols. Furthermore, the Kusama, Solana, and Terra blockchains are supported by the liquid staking provider. In the future, the co-founder stated that Lido intends to integrate Polygon later this month. A decentralized autonomous organization governs Lido (DAO).
“A lot of decisions are flowing through the DAO, even minor ones like onboarding a new validator or staking more assets on that validator.” “Big decisions [also go through the DAO], such as dispersing Lido tokens or introducing incentives to the tokens,” Lomashuk explained.