What Is Lido Dao?

Lido DAO is a community that created a liquid staking function for Ethereum and seeks to allow users to yield staking rewards without maintaining staking infrastructure or locking assets. The platform aims to offer users to stake the ether without losing the capability to trade the tokens. Lido is a decentralized network that seeks to issue a safe liquid token compared to exchange staking and seeks to offer more flexibility over self-staking. Also, the platform seeks to reduce the risks of losing the staked funds caused by malicious third parties and software failures.

The platform acknowledges that Ethereum is soon to be the major economy, but staking on the initial stages of Ethereum 2.0 comes with risks related to frozen staked assets. Until the transfers are available in Ethereum 2.0, users cannot withdraw staked assets and trade them on exchanges. Lido's liquid staking protocol seeks to solve the drawbacks of Ethereum 2.0, where users can place ether in Lido smart contracts and acquire tokenized versions for the ether. Also, the DAO-controlled smart contracts stake the tokens with the DAO-selected node operators. The users' funds here are in control of the DAO, but the node operators have no direct access to the users' assets. Furthermore, Lido is more flexible than self-staking as it eliminates the freezing of assets and maintains a validator node. 

As the whitepaper suggests, the Lido platform operates with two tokens: stETH token, the token version of staked Ethereum and LDO, which is the governance token for Lido DAO. The stETH token displays the users' funds, staking rewards, and slashed penalties. The stETH token serves as a utility instead of staked ether, and it can be transferred, traded, or utilized in DeFiapplications. Meanwhile, LDO is the governance rights granting token. The more LDO token users lock in the voting contract, the more decision-making power users seek to possess in the ecosystem.

Liquid staking is a good alternative to exchange and self-staking, and Lido seeks to provide a great balance between risk, convenience, and rewards to the users.