Proposal for Lido Finance to Launch Its Own Blockchain Emerges

The Lido Finance community has recently seen a proposal to launch a dedicated blockchain for Liquid Staking operations, aiming to increase the value accumulated for the project's native token.

The proposal, named "The L1do Blockchain," was introduced on Lido's forum, outlining a plan to develop a separate chain for the project. The objective is to retain loyal users and mitigate risks from competitors.

The author of the proposal highlighted several core criteria for this plan, including:

• Low Costs: Making the Lido chain a layer that bundles staking, unstaking, and restaking operations, then deploying them en masse on Ethereum's Layer-1.
• DeFi Operations: Enhancing the utility of the stETH token (e.g., lending and borrowing activities) to ensure these operations take place directly on Lido's chain.
• Validators: Requiring participating validators in the network to hold LDO tokens to contribute to the validation process.
• Gas Fees: Allowing the use of ETH, stETH, wstETH, and LDO tokens for transaction fees.

However, establishing a separate chain also poses challenges, such as:

• Bridge Risks: Potential vulnerabilities in bridging between networks.
• Separation of stETH: Removing stETH from the current Ethereum layer could lead to conflicts of interest.

At the time of writing, the proposal remains a discussion thread within the community and has not yet progressed to a formal vote.

The market is witnessing a clear shift in product development trends, with projects increasingly opting to create their own chains. In September 2023, a similar move was seen from MakerDAO, an early DeFi project, which planned to fork Solana's codebase to develop its own chain.

Further Insights and Community Feedback

The community is actively discussing the potential benefits and drawbacks of this proposal. If implemented, "The L1do Blockchain" could offer a more integrated and streamlined staking experience while potentially enhancing the value proposition of Lido’s native tokens.

Lido Finance is known for its liquid staking solutions, which allow users to earn staking rewards while maintaining liquidity. As the DeFi landscape evolves, the proposal for Lido to have its own dedicated blockchain reflects broader industry trends towards greater autonomy and customized solutions to meet specific project needs.