Lido is the largest liquid staking protocol in the world, controlling over 30% of all staked ETH as of 2025. Its token, stETH, is everywhere in DeFi — you stake ETH, get stETH back, and can use it across lending, farming, and trading while still earning staking rewards.
For degens, Lido is the gateway to yield + liquidity. But the big worry is centralization: if Lido gets too dominant, it could threaten Ethereum’s decentralization itself.
📜 Background & Reputation
Launched in December 2020, Lido quickly became the leader of liquid staking. It solved the “locked ETH” problem by issuing stETH, a derivative that grows in value as rewards accrue.
Reputation:
- Beloved by DeFi degens because stETH can be used as collateral everywhere.
- Criticized by Ethereum purists for being “too big to fail.”
- Audited and battle-tested, but centralization concerns remain.
🚀 How It Works
- Stake ETH via Lido → receive stETH.
- stETH balances update daily to reflect staking rewards.
- Use stETH in DeFi: borrow stablecoins, farm yields, LP pairs, or even restake on EigenLayer.
- LDO token controls governance, but power is concentrated in a few wallets.
🛡️ Safety and Trust
- Audits: Lido has undergone multiple audits and is considered technically secure.
- Risk #1 — Centralization: Too much ETH staked through Lido could compromise Ethereum’s decentralization.
- Risk #2 — Depeg: During stress events (e.g., FTX collapse), stETH briefly depegged from ETH, scaring traders.
- Risk #3 — Smart Contracts: Always a risk, though Lido has avoided major hacks.
🎭 What the Users Say
Positive:
- “stETH is the most useful token in DeFi.” — CT degen
- “My ETH earns yield while I borrow against it, amazing.” — Reddit
- “The only way I stake ETH, too easy.” — Telegram
Negative:
- “Lido controls too much ETH, it’s dangerous.” — Ethereum maxi
- “Depegs freak me out, can’t trust stETH 100%.” — Trustpilot
- “Feels like a monopoly.” — Twitter trader
The vibe: powerful, useful, but polarizing.
🌍 Who Actually Uses Lido?
- DeFi degens who want to loop yields using stETH.
- Institutions seeking easy ETH exposure.
- Retail users who find solo staking too technical.
Basically, anyone who wants ETH staking + liquidity ends up with Lido.
📊 Real Examples
- 2022: Lido dominates during ETH Merge hype.
- 2023: stETH depeg during FTX crash spooks traders.
- 2024: Lido expands to support Polygon, Solana, Kusama, but ETH remains the focus.
- 2025: Over 30% of all staked ETH is via Lido — a centralization red flag for some.
🎰 Should a Degen Use It?
Lido is like the main sportsbook at the casino. Everyone uses it, the lines are deep, and the odds are fair. But too many people betting at the same house creates systemic risk.
For degens, Lido is almost a must-use if you’re farming ETH yields. But always be aware of depeg events and centralization risks.
🏁 Final Degen Verdict
Lido is the king of liquid staking. It’s powerful, useful, and essential for DeFi farming. But with great dominance comes great risk — if Lido wobbles, Ethereum wobbles.
WAGMI — as long as stETH holds the line.
