Lido announces phasing out of polygon liquid staking protocol after community vote

Lido, the prominent liquid staking protocol, has announced the discontinuation of its liquid staking protocol at Polygon, marking the end of its operations for the next few months. After extensive discussions on the DAO forum and a community vote, LDO token holders officially approved the decision to remove Lido on Polygon.

The process is expected to begin shortly.

Departure from Lido del Polígon

Initially launched in 2021 through a proposal from Shard Labs, Lido on Polygon faced challenges such as limited user adoption, insufficient rewards, and high resource maintenance requirements, according to the official blog post. In addition, the evolution of the DeFi space, specifically the increasing focus on zkEVM solutions, has reduced the demand for liquid stake in Polygon PoS, hindering Lido’s ability to serve as a core DeFi layer.

These factors, combined with Lido’s strategic focus on Ethereum, as described in the GOOSE and reGOOSE governance initiatives, led to the re-evaluation and eventual suspension of Lido at Polygon.

The phase-out process has several key implications for stMATIC holders. As such, rewards will be suspended during the transition and a temporary pause in operations is expected between January 15th and January 22nd, 2025, during which no withdrawals will be processed.

Users are encouraged to develop their MATIC tokens through the Lido on the Polígon front-end by June 16, 2025. After this deadline, front-end support will cease and withdrawals will only be accessible through tools blockchain explorer.

The calendar begins on December 16, 2024, when new entries will no longer be accepted. A six-month phase-out period will follow, running from December 16, 2024 to June 16, 2025, to facilitate a smooth transition for users.

Lido previously halted operations in Solana last year. This decision came after a community vote, citing issues of financial sustainability and low fares as key issues. Lido initially launched in Solana on September 8, 2021.

Setback for the landfill ecosystem

Lido’s current decision to end Polygon comes after the lending protocol that Aave proposed suspended its operations. The proposal was made by Aave founder Marc Zeller on December 13 in response to Polygon’s government request for a new bridge mechanism, which raised concerns about the risk profile of bridge assets.

In a related development, liquid recovery protocol Swell announced that its layer 2 is migrating to the optimism superchain, moving away from the Polygon Chain Development Kit (CDK) as part of this transition in October.

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