Lido, a renowned liquid staking protocol, has recently received approval from its governing body to deploy Lido’s Wrapped Staked Ether (wstETH) to Coinbase’s Base network. This development was announced on November 8th, paving the way for the token to become live and available for trading and use in decentralized finance (DeFi) applications on the Base network. This significant move by Lido aims to bridge the gap between scalability limitations and the growing demand for decentralized staking in the Ethereum ecosystem.
Lido’s liquid staking protocol offers users the ability to stake cryptocurrencies while simultaneously utilizing them in DeFi applications. It accomplishes this by issuing a derivative token, known as “Lido taked Ether (stETH),” which exists on the Ethereum network. However, when this token needs to be sent to other networks through a bridge, it must first undergo a wrapping process to create a double derivative token called “Wrapped Staked Ether (wstETH).”
The availability of wstETH on Coinbase’s Base network marks a major milestone in the journey to scale its adoption. Marin Tvrdić, a contributor to LidoDAO, expressed that expanding the protocol’s network of compatible Layer 2 (L2) bridges helps address scalability limitations and caters to the growing demand for decentralized staking in the broader Ethereum ecosystem. This development further strengthens Lido’s commitment to offering users increased efficiency and accessibility when it comes to staking their assets.
It is important to note that not all versions of wstETH have been accepted as official. For instance, LayerZero launched a version of wstETH for networks like Avalanche, BNB Chain, and Scroll, which drew criticism from multiple protocols for being deemed “proprietary.” As a result, the DAO is currently debating the acceptance of this version, and no vote has been taken on it as of yet.
Lido’s deployment of wstETH to Coinbase’s Base network brings about exciting possibilities for the future of decentralized staking and DeFi applications. By enabling users to stake their assets while simultaneously using them, Lido’s liquid staking protocol offers a unique and efficient solution. As the Ethereum ecosystem continues to evolve, initiatives like wstETH contribute to its growth and cater to the increasing demand for decentralized financial services. With further developments and advancements anticipated in the field of decentralized staking, the adoption of tokens like wstETH will undoubtedly play a pivotal role in shaping the future landscape of the cryptocurrency industry.