Lido on Solana wind down ‘deemed a necessity’ after low fees, says staking firm

Decentralized liquid staking protocol Lido Finance has announced a decision to cease operations on the Solana blockchain following a community vote in Lido’s decentralized autonomous organization.

The proposal to sunset Lido on Solana was first put forward by Lido’s peer-to-peer team on Sept. 5, citing unsustainable financials and low fees generated by Lido on Solana. Voting commenced on Sept. 29 and finished a week later on Oct. 6.

“After extensive DAO forum discussion followed by community vote, the sunsetting of the Lido on Solana protocol was approved by Lido token holders and the process will begin shortly,” Lido explained in an Oct. 16 post.

Lido will not be accepting staking requests as of Oct. 16. Voluntary node operator off-boarding will begin on Nov. 17 and Lido users will need to unstake on Solana’s frontend by Feb. 4.

“After this date, unstaking will need to be done using 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 earlier proposal saw Lido seeking $20,000 per month from Lido DAO to support technical maintenance efforts involved with sunsetting operations on Solana over the next five months.

*Lido’s statement on terminating services on Solana. Source: Lido.fi*

Lido’s P2P team has been working on the Lido on Solana project since acquiring it in March 2022 from Chorus One.

Since the takeover, the P2P team has invested about $700,000 into Lido on Solana and made $220,000 in revenue, resulting in a net loss of $484,000, according to the mediakov, the author of the proposal.

The alternative in the Sept. 5 proposal was to provide more funding to Solana from Lido DAO — however 65 million (92.7%) of the 70.1 million LDO tokens (voted by token holders) were in favor of sunsetting operations on Solana instead, according to open-source voting platform Snapshot.

Lido explained the decision was a difficult but necessary one to make:

“Whilst this decision was difficult in the face of numerous strong relationships across the Solana ecosystem, it was deemed 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 sunsetting process.

Lido’s staking services are now only supported on Ethereum and Polygon, where $14 billion and $80 million are staked, respectively, according to Lido’s website.

Lido launched on Solana on Sept. 8, 2021, when SOL was priced at $189 — an 87% fall from its current price of $24, according to CoinGecko.

Despite the news, SOL is up 8.6% over the last 24 hours.