[TheDefiant]
Lido, the largest Ethereum staking network, decided to exit the Solana blockchain as revenue that was expected to come in from the operation didn't offset its development and marketing costs.
Lido reached the decision to leave the second-largest chain by value staked after a poll on the decision closed with 92.7% of participants voting to sunset operations on the chain.
P2P Validator, the Lido on Solana development team, had so far invested ~$700,000 primarily in development and support. Their revenue during this period was around $220,000, including developer fees and milestone rewards, resulting in a net loss for Lido of ~$484,000, according to a post on the Lido forum.
P2P Validator put forth a proposal to the Lido community suggesting an estimated cost of $1.5M for the next 12 months. This figure was intended to cover various expenses, including a quarterly development retainer of $200,000, an annual adoption incentive program of $600,000 and $100,000 for customer support.
P2P's Expansion Vision
P2P projected that with the proposed funding, Lido on Solana could grow and secure more than 1% of the Solana staking market share.
The team estimated that a 1% share of the staking market in Solana would result in treasury income of approximately 10,191 SOL over 12 months. At current prices, this amount translates to approximately $200,000.
Total staked tokens on Solana are worth about $9.35B, compared with $43.7B on Ethereum, according to stakingrewards.com.
Community Decision
Despite the potential upside presented by P2P Validator, the Lido community argued the proposal doesn't make economic sense.
"Why would DAO treasury have exposure to 1.5m USD invest for potential return of 10k SOL," wrote a user under the name Marin in the forum. "Voters need to be aware that it would require 7.6x increase in SOL price for treasury to be at 0."
A forum commenter by the user name of btuck added that the Solana Foundation hasn't been supportive of liquid staking.
"Solana Foundation isn’t supporting liquid staking with their own SOL yet, and there is also a significant amount of locked SOL (~60M) that is not eligible either," they wrote. "And Solana DeFi needs to be tested further for big accounts to really trust them with size."
Blessing for Competitors
With Lido bowing out of the Solana ecosystem, the competitive landscape clears up for liquid staking projects Marinade Finance and Jito, both of which have incentive programs in place to attract users, analyst DeFi Ignas wrote on X/Twitter.
"In fact, Jito has been growing faster thanks to the Jito Points airdr0p system where you get points not only for holding JitoSOL but actively using it in DeFi for providing LP or lending," DeFi Ignas wrote.
Sunsetting Process
stSOL token holders will still receive network rewards during the sunsetting process but will only be able to unstake via the Lido on Solana frontend until Feb. 4, 2024. Afterward, unstaking will need to be done through its command-line interface.
Node operators will be provided voluntary off-boarding instructions via Lido community channels.
The key dates of the sunsetting process are as follows:
- October 16, 2023: Lido on Solana staking will be discontinued, and no new stakes will be accepted.
- November 17, 2023: The voluntary node operator off-boarding process will begin.
- February 4, 2024: The Lido on Solana frontend support will be concluded. After this point, unstaking will only feasible via the Command Line Interface (CLI).
Lido's discontinuation on Solana marks an end of a significant chapter, though the optimism for Solana's potential remains high amongst the Lido contributors.
Read the original post on The Defiant
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