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Lido to end Polygon services after low user demand

Lido to end Polygon services after low user demand

GrafaGrafa2024/12/17 05:50
By:Isaac Francis

Lido Finance has announced it will discontinue its liquid staking services on the Polygon (CRYPTO:MATIC) network, citing low user adoption, resource-intensive maintenance, and shifting ecosystem priorities.

The decision came after discussions among Lido DAO Token (CRYPTO:LDO) holders and a community vote in November, where 99% supported winding down operations.

Two proposals were initially considered: a complete exit or reevaluating the platform's economics.

Lido noted several challenges, including “reduced demand for liquid staking solutions on Polygon POS” and a growing focus on zkEVM solutions.

“Alternative liquid staking solutions have been built within an ecosystem that proved smaller than initially anticipated,” the team added.

Shard Labs, the group that brought Lido’s services to Polygon in 2021, said the “DeFi migration push towards zkEVM” has weakened demand for Polygon proof-of-stake and liquid staking services.

As of Dec. 16, users can no longer request new staking operations on Polygon through Lido.

However, those with staked MATIC can still withdraw their tokens through the Lido interface until June 16, 2025.

Withdrawals will be temporarily paused between Jan. 15 and Jan. 22, 2024.

After June 16, 2025, users will need to use browser tools for withdrawals as front-end support will end.

Lido currently holds $45 million in staked tokens on Polygon, while Polygon’s total value locked (TVL) exceeds $1.2 billion, according to DefiLlama.

This marks the second time Lido has ceased operations on a blockchain.

In 2023, Lido discontinued its services on Solana (CRYPTO:SOL) after a community vote due to financial sustainability concerns.

The move aligns with a broader trend of protocols reassessing their positions on Polygon.

Aave (CRYPTO:AAVE) recently proposed withdrawing from the network, citing risk concerns tied to bridged assets and governance decisions regarding Polygon’s $1 billion stablecoin reserves.

At the time of reporting, the price of Polygon (MATIC) was $0.5838.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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