Lido Finance Launches V2, Activates ETH Staking Withdrawals

Lido Finance, the leading liquid staking protocol on Ethereum, has successfully rolled out its V2 upgrade. This significant update now allows users to unstake stETH and reclaim their original ETH.

Lido Finance Launches V2, Activates ETH Staking Withdrawals

On the evening of May 15, Lido Finance upgraded to version V2, a major change that enables users to withdraw staked Ethereum from the platform. Prior to this, the protocol had opened voting for implementing V2 on May 12.

The V2 upgrade is considered one of the most crucial updates for Lido Finance following the Shapella hard fork last month, which unlocked a substantial amount of ETH for investors. Since then, Lido V2 has undergone continuous testing and nine rigorous audits.

With Lido V2, 270,000 ETH is available in the Withdrawals vault, allowing investors to process withdrawal requests without excessive wait times. Once this ETH is depleted, the vault will be replenished. In other words, investors have the opportunity to receive their ETH more quickly within the first three days of unlocking, according to Lido. The maximum time to exit the queue is estimated at 5 days and 14 hours by the Rated network explorer.

Notably, the defunct lending platform Celsius holds over 400,000 stETH (equivalent to $720 million) on Lido, according to data from Nansen. Under financial pressure last year, Celsius faced liquidity issues, making it difficult for them to convert their stETH back to ETH to meet user withdrawal requests. The new activation on Lido allows Celsius to recover funds and pay its customers.

Additionally, the new Lido version will introduce a new feature - Staking Router. This will enable node operators, from individuals to DAOs, to stake on independent validators or collaborate via infrastructure such as DVT. Staking Router will also significantly enhance the decentralization of the network.

Lido Finance is the dominant liquid staking solution with over $12 billion TVL. Since the Shanghai upgrade, the total amount of ETH staked through Lido has increased by 7.2%. Currently, over 6.2 million ETH is waiting to be withdrawn from the platform. In the first three hours post-upgrade, approximately 260 stETH was exchanged for ETH, valued at around $500,000.

stETH withdrawals dashboard:

• Individual & aggregate withdrawal requests.
• Current withdrawal queue.
• stETH large balance changes. Source

When users deposit ETH into Lido, their coins are not locked but rather represented by stETH at a 1:1 ratio, allowing continued DeFi activity on other platforms.

As of now, the price of LDO has risen by 7% to $2.20 in the past 24 hours.

LDO/USDT 1h Chart on Binance as of 09:00 AM, May 16, 2023

Liquid staking solutions have gained popularity following the Shapella upgrade. By late February 2023, liquid staking had become the second-largest segment in DeFi, surpassing DEXs. However, legal threats targeting this product in the U.S. remain. The SEC has previously stated that staking service providers are likely to be considered securities issuers.