Lido expands wstETH to Polygon
Lido announced its expansion to Polygon, enabling users to bridge wstETH onto Polygon.
DeFi protocol Lido has announced its expansion to the Polygon network, enabling users to bridge Lido's Wrapped Staked Ether (wstETH) onto Polygon.
This move highlights Lido's commitment to promoting cross-chain DeFi capabilities, as the company has chosen Polygon due to its impressive native DeFi activity, strong security track record, and existing Lido partners on the network.
With the integration, major DeFi protocols Kyber, Balancer, and Beefy Finance will provide liquidity incentives for wstETH markets on Polygon. Polygon ranks as the fifth-largest smart contract network, boasting a total value locked (TVL) of $1 billion, according to DeFi Llama.
This expansion marks Lido's third deployment on an Ethereum scaling solution, following previous launches on Optimism and Arbitrum in October 2020. Lido's presence also extends to the Solana, Moonbeam, Moonriver, and Terra Classic blockchains.
Lido's Ethereum-based stETH token is a liquid staking derivative (LSD), representing a share of staked Ether and accruing corresponding staking rewards. The Wrapped stETH allows the token to be easily bridged between networks, enabling users to participate in the DeFi ecosystem by depositing ETH with Lido and receiving stETH tokens in return.
Lido holds a dominant position as the largest LSD provider, accounting for 70-80% of the sector's market cap.
The imminent Shapella upgrades for Ethereum are expected to spur growth in the LSD sector, as the activation of staked Ether withdrawals incentivizes arbitrageurs to minimize the spread between LSD tokens and Ether. This development also presents opportunities for users to combine staking rewards with other sources of yield in DeFi protocols.
However, critics argue that the integration of LSDs into DeFi protocols could pose a centralization risk to Ethereum's staking ecosystem.
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