Behind Lido's cancellation of Solana staking, is it a reorganization of DeFi or a reshuffle of public chains?
The end of cooperation between Lido and Solana has caused anxiety in the community, and the future trends can be roughly analyzed.Recently, Lido officially released a statement announcing that its staking partnership with SOL is coming to an end. Starting from October 16, Lido will no longer accept new SOL staking applications.
More importantly, beginning on November 17, participating node operators will gradually exit this partnership, and by February 4, 2024, Solana's frontend will no longer support services related to Lido. After that, any staking-related operations will need to be completed through the command line interface (CLI).
Lido and Solana officially announce the cancellation of their partnership
Nevertheless, Lido assures that during this transition, stSOL holders will still be able to receive their staking rewards as usual.
Strong Alliance During Bull Market, Both in Ascendancy
The collaboration between Lido and Solana stems from the rapid rise of Solana's blockchain technology, particularly its significant contributions to the decentralized finance (DeFi) sector. Solana quickly gained favor among developers and projects due to its efficient and low-cost transaction characteristics. In this context, Lido, as a leading provider of decentralized staking solutions, naturally saw a tremendous opportunity to collaborate with Solana.
Lido's core advantage lies in providing users with a simplified staking process, allowing them to easily stake cryptocurrencies and earn rewards without directly engaging in the cumbersome staking process. Meanwhile, Solana's high throughput and low transaction fees created an ideal environment for Lido to offer better services to a large number of users.
This partnership was based on the complementary strengths of both parties. Lido hoped to further expand its business through Solana's technological prowess, while Solana aimed to collaborate with well-known DeFi projects like Lido to enhance its standing in the cryptocurrency community.
However, as recent news has revealed, this partnership seems to have reached its conclusion. Lido has decided to discontinue support for SOL staking services. There are profound reasons behind this decision. Lido's peer-to-peer team first proposed shutting down Lido on Solana on September 5, primarily because Lido's economic model on Solana had become unsustainable, especially due to the low fees generated by Lido on Solana. After a week-long voting process, this proposal was approved on October 6.
Since the P2P team acquired Lido on Solana, they have invested approximately $700,000 but only generated $220,000 in revenue, resulting in a net loss of $484,000. Although there was an alternative proposal in the September 5 proposal to provide more funding from Lido DAO to Solana, according to data from the open-source voting platform Snapshot, out of 70.1 million LDO tokens, 65 million (92.7%) voted in favor of terminating operations on Solana.
This decision reflects Lido's economic and strategic considerations and marks the end of an era of collaboration between Lido and Solana. From the early proposal to the final voting results, there seemed to be signs of this decision well in advance.
What Chain Reactions Will Follow the Cancellation of Their Partnership?
With Lido announcing it will no longer support SOL staking, many stSOL holders may feel confused and anxious about the future. In this context, understanding the potential impacts and how to respond becomes particularly crucial.
A review of the partnership situation released by the Lido community
Staking Rewards Remain Unchanged: First and foremost, holders can rest assured that their staking rewards will not be immediately affected. Lido has made it clear that although it has decided to discontinue support for SOL staking, stSOL holders will still be able to receive their staking rewards during this transition.
Adjustment of Operating Methods: Starting February 4, 2024, Solana frontend services related to Lido will no longer be available. This means that when stSOL holders need to stake or unstake, they will need to turn to the command line interface (CLI). This undoubtedly increases the complexity of operations, and holders may need to spend time familiarizing themselves with the new operating methods.
Uncertainty in Market Reaction: Lido's decision may impact the market liquidity and price of stSOL. In particular, if the market reacts poorly to this decision, the price of stSOL may come under pressure. However, holders should note that market reactions are also influenced by various other factors.
Long-term Considerations: While in the short term, stSOL holders' staking rewards remain unaffected, the termination of the partnership between Lido and Solana may impact the long-term prospects of stSOL. This may require holders to reassess their long-term investment strategies and holding plans.
Stay Updated: During this transitional period, it is crucial to continuously obtain the latest information. stSOL holders should closely monitor Lido's official announcements and updates to ensure they are informed of all the latest information related to their held assets.
Voting results regarding the partnership
Therefore, in light of Lido's decision, stSOL holders may face some challenges, but it also provides an opportunity to reassess and adjust strategies. It is advisable for holders to remain calm, closely follow relevant news and announcements, and make informed decisions based on their circumstances.
No Need to Be Too Pessimistic; The End of Cooperation May Be the Beginning of Reevaluation for Both Parties
The end of the partnership between Lido and Solana marks a strategic adjustment for two significant projects at a certain stage. In the fields of cryptocurrency and decentralized finance, collaborations and strategic changes are aimed at responding to the ever-changing market environment and user demands. For Lido, this decision may be based on the sustainability of its economic model, market feedback, and long-term planning for future development. For Solana, this may also be an opportunity to reevaluate its partners and strategic direction in the DeFi space.
For the market and the community, such changes may bring temporary uncertainty and volatility, but they also provide space for rethinking and exploring new opportunities. Importantly, both project teams and community members should view these changes from a broader perspective, understanding the reasons behind them and their long-term impacts.
Overall, the end of the partnership between Lido and Solana does not mean that there are no more possibilities for the future of both parties. On the contrary, this may be a new beginning, bringing more opportunities and challenges for both. In this rapidly evolving and ever-changing field, adaptability, innovation, and continuous learning are key. We look forward to seeing Lido and Solana bring more innovation and value in the future.
