Decentralized liquid staking protocol, Lido Finance, has made the decision to cease operations on the Solana blockchain. This decision came as a result of a community vote within Lido’s decentralized autonomous organization (DAO). The proposal to sunset Lido on Solana was first introduced by Lido’s peer-to-peer team on September 5th. They cited unsustainable financials and low fees generated by Lido on Solana as the main reasons for this proposal. The voting process began on September 29th and concluded on October 6th.
After extensive discussions within the DAO forum and the community vote, the sunsetting of the Lido on Solana protocol was approved by Lido token holders. According to a blog post by Lido on October 16th, the process will begin shortly. The first step in this process is that Lido will no longer be accepting staking requests as of October 16th. Additionally, voluntary node operator off-boarding will commence on November 17th. Lido users will need to unstake their assets on Solana’s frontend by February 4th. After this date, unstaking will need to be done using the Command Line Interface (CLI).
To support the technical maintenance efforts involved with sunsetting operations on Solana over the next five months, Lido DAO initially sought $20,000 per month. This proposal was included in the earlier proposal submitted on September 5th. The P2P team at Lido has been working on the Lido on Solana project since acquiring it in March 2022 from Chorus One. Since the acquisition, they have invested approximately $700,000 into Lido on Solana and generated $220,000 in revenue. However, this resulted in a net loss of $484,000, as stated by the author of the proposal.
The alternative proposal in September was to provide additional funding to Solana from Lido DAO. However, the majority of LDO token holders (92.7%) voted in favor of sunsetting operations on Solana instead, as reported by the open-source voting platform Snapshot. Lido acknowledged that this decision was difficult to make, given the strong relationships they have developed within the Solana ecosystem. Nevertheless, they deemed it necessary for the continued success of the broader Lido protocol ecosystem.
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It is important to note that staked-Solana (stSOL) token holders will still continue to receive network rewards throughout the sunsetting process. However, Lido’s staking services will be supported only on Ethereum and Polygon. As per Lido’s website, approximately $14 billion and $80 million are staked on Ethereum and Polygon, respectively.
Lido’s launch on Solana took place on September 8th, 2021, when the price of SOL was $189. Currently, SOL is priced at $24. Despite the news of Lido ceasing operations on Solana, SOL has experienced an 8.6% increase in value over the last 24 hours.
In conclusion, Lido Finance’s decision to sunset its operations on the Solana blockchain came after careful consideration and a community vote. The decision was driven by unsustainable financials and low fees generated by Lido on Solana. Lido will not be accepting staking requests from October 16th, and the process of off-boarding node operators will begin on November 17th. Lido users will need to unstake their assets from Solana’s frontend by February 4th. Despite these changes, Lido’s staking services will continue to be supported on Ethereum and Polygon.
