Solana’s Liquidation Was “Deemed a Necessity” After Low Fees, Says Lido Finance
Decentralized liquid staking protocol Lido Finance has announced the decision to cease operations on the Solana blockchain following a community vote in the Lido Decentralized Autonomous Organization.
The proposal to delist Lido on Solana was first made on September 5 by Lido’s peer-to-peer team, citing unsustainable financials and low fees from Lido on Solana. Voting began on September 29th and ended a week later on October 6th.
“After extensive discussion on the DAO forum and subsequent community voting, the decommissioning of the Lido-on-Solana protocol has been approved by Lido token holders and the process will begin shortly,” Lido explained in a post from October 16th. Lido will no longer accept staking requests from October 16th.
Voluntary offboarding of node operators begins on November 17th and Lido users have until February 4th to de-stake on Solana’s frontend.
“After this date, unstaking must be done via the CLI,” Lido added.
After extensive DAO discussion followed by community vote, the sunsetting of Lido on Solana was approved by LDO holders and will begin shortly.
More information here: https://t.co/MyImL1qpap
— Lido (@LidoFinance) October 16, 2023
The previous proposal was for Lido to request $20,000 per month from Lido DAO to support technical maintenance related to the cessation of operations on Solana over the next five months.
Lido’s P2P team has been working on the Lido on Solana project since acquiring it from Chorus One in March 2022.
Since the acquisition, the P2P team has invested around $700,000 in Lido on Solana and generated $220,000 in revenue, resulting in a net loss of $484,000, according to Mediakov, the author of the proposal.
The alternative in the September 5th proposal was to provide Solana with more Lido DAO funds – however, 65 million (92.7%) of the 70.1 million LDO tokens (from token holders) voted voted) to stop operating Solana instead, according to open-source voting platform Snapshot.
Lido explained that the decision was difficult but necessary:
“While this decision was difficult given the numerous strong relationships across the Solana ecosystem, it was viewed as a necessity for the continued success of the broader Lido protocol ecosystem.”
Lido confirmed that staked Solana (stSOL) token holders will continue to receive network rewards throughout the expiration process.
Lido’s staking services are now only supported on Ethereum and Polygon, where, according to Lido’s website, $14 billion and 80 million US dollars will be invested.
Lido launched on Solana on September 8, 2021, when SOL fell by $24 and the price was at $189 – an 87% drop from the current price of $24, according to CoinGecko.
Despite the news, SOL is up 8.6% in the last 24 hours. SOL price movements in the last seven days. Source: CoinGecko
