One of the largest Merge staking providers, Lido Finance, has started on the layer-2 networks Optimism and Arbitrum, which the company claims will significantly increase Ethereum staking accessibility while lowering gas costs.
When the team accepted that various layer-2 networks had “demonstrated economic activity,” the expansion to L2 was first announced. On October 7, the fresh deployment to L2 networks Arbitrum and Optimism went live.
Lido is now on L2 🏝️
Bridge your staked ETH to Layer 2 protocols at the click of a button to benefit from lower gas fees and exciting DeFi opportunities.
— Lido (@LidoFinance) October 6, 2022
Instead of immediately staking Ethereum and having it locked up, Lido offers liquid staking, giving stakers more flexibility by allowing them to withdraw their money whenever they want.
Industry executives have previously stated that institutional staking won’t catch on unless the problem of asset lockup can be resolved, including Alesia Haas, CFO of Coinbase. Because Lido offers this adaptable or liquid staking option, its appeal has increased.
The wrapped stETH (wstETH) token from Lido is able to connect to the two networks thanks to the initial stage of its layer-2 distribution.
The Lido wrapped version of the Ethereum liquid staking token (stETH) maintains a fixed balance of stETH for usage in DeFi applications that demand a constant balance mechanism. StETH is the Ethereum liquid staking token that is issued in proportion to staked ETH.
In addition, starting on launch day, Lido will reward wstETH bridged across each network with 150,000 LDO tokens every month. The project intends to increase wstETH liquidity for farming incentives on DeFi partners including Kyber Network, Balancer, and Curve.
Arbitrum and Optimism enable users to transact in the Ethereum ecosystem while avoiding the network’s previously high fees and poor performance. These optimistic rollups take transactions on networks other than Ethereum’s congested main chain, bundle them up, and send them back to Ethereum to be included in its ledger.
According to DefiLlama, about $3 billion in bitcoin was circulating on the Arbirtrum and Optimism networks at the time of publication. Wrapped staked ETH (wstETH), a “wrapped” form of stETH that has been bridged across from Ethereum, will now be available to users of these quicker and cheaper Ethereum sister networks.
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