Lido Finance, one of the largest providers of Merge staking services, has launched two Tier 2 networks, Arbitrum and Optimism, which it says improve access to Ethereum staking while reducing gas fees.
The plan to expand to L2 was first revealed in July, when the team acknowledged that several Tier 2 networks “demonstrated economic activity” with the new Arbitrum and Optimism L2 network launched on October 7.
Lido offers liquid pricing, giving miners more flexibility as they can withdraw their money at any time instead of accumulating and blocking Ethereum directly.
Industry leaders such as Coinbase CFO Alicia Haas have previously pointed out that institutional prices will not develop until the issue of asset locks is resolved. Lido offers this flexible or floating option, which is why it has grown in popularity.
The first phase of the Layer 2 implementation allows the Lido Wrapped Stacked Ether (wstETH) token to connect to two networks.
stETH is a floating Ethereum staking token issued by Lido relative to ETH staking, and its encapsulated version maintains a stable stETH balance for use in decentralized finance (DeFi) applications that require a fixed balance mechanism.
In addition, Lido awards 150,000 Lido DAO (LDO) tokens in rewards per month from launch day to wstETH connected to each network. The initiative aims to create wstETH liquidity to stimulate agriculture from DeFi partners including Balancer, Curve and Kyber Network.
Lido is now on L2 ️
Connect ETH protocols to layer 2 at the push of a button to benefit from lower gas fees and exciting DeFi opportunities.
— Lido (@LidoFinance) October 6, 2022
According to the website, Lido has $7.4 billion in pegged ETH, which is about 5.5 million tokens, or about 40% of the total stake. It was also reported that stETH lost contact with the ether (
) earlier this year, as the cryptocurrency contagion began to spread, but recovery was swift.
On the subject: 64% of ETH stacks are controlled by 5 organizations – Nansen
Tier 2 networks that decided to roll out first gained 80% market share among them.