Lido is a liquid staking protocol on Ethereum that issues stETH, a token representing staked ETH that keeps accruing validator rewards while remaining tradable and usable as collateral. As of mid-2026 the protocol holds roughly 8.7 million ETH, close to a quarter of everything staked on the network, which makes it the largest single staking entity in crypto according to Lido's own protocol scorecard. LDO is the governance token that decides how that stake gets allocated, who runs the validators, and what the protocol charges for the service.
The protocol launched in December 2020, weeks after the Beacon Chain went live, founded by Konstantin Lomashuk, Vasiliy Shapovalov and Jordan Fish. Its pitch then is the same one it makes today: staking ETH natively locks up 32 ETH per validator and demands uptime most people cannot provide, so Lido pools deposits instead and hands back a receipt token that never stops moving.
How Lido Turns ETH Into stETH
The deposit flow is short. A user sends ETH to the Lido staking contract and receives stETH at a 1:1 rate. The protocol batches those deposits into 32 ETH chunks, assigns them to node operators who run the actual validators, and passes the rewards back to stETH holders daily.
What makes stETH unusual among staking receipts is that it rebases. The balance in your wallet grows each day as consensus and execution rewards land, so 10 stETH becomes 10.0007 stETH without any action on your part. That mechanic is elegant for holders and awkward for smart contracts, which is why Lido also issues wstETH, a wrapped version with a fixed balance whose value per unit climbs instead. Lending markets and liquidity pools overwhelmingly use the wrapped form.
Lido charges 10% of staking rewards, split evenly: 5% to node operators, 5% to the DAO treasury. Users keep the other 90%. As of mid-2026 the protocol's advertised base rate sits near 2.5% APR, down considerably from the 4% to 5% range of earlier cycles because more ETH competing for the same issuance means a thinner slice each. That rate is a floating pass-through of Ethereum's own staking economics, so nobody, including Lido, controls it.
Withdrawals arrived with Lido V2 in May 2023, after the Shapella upgrade made validator exits possible. Before that, the only way out of stETH was selling it on secondary markets, which is why the token briefly traded at a 7% discount during the 2022 credit unwind. Redemptions now clear directly through the protocol, and the peg has held tight since. For a broader primer on how these receipt tokens work across protocols, our guide to liquid staking covers the category.
Who Actually Runs the Validators
Lido does not operate validators itself. Since V2 introduced the Staking Router, validator capacity is organized into modules, each with different entry requirements and reward splits. This is the part of the design most casual observers miss, and it is where the decentralization argument gets fought.
The Curated Set
Around 30 professional staking firms, approved by DAO vote, run the bulk of Lido's validators. They are vetted, publicly named, and subject to performance monitoring. This module is the reason critics call Lido permissioned, and the reason institutions treat it as reliable.
Simple DVT
Distributed validator technology splits a single validator's duties across several machines run by different parties, so no one operator holds the keys alone. Lido's Simple DVT module uses this to onboard smaller operators, including solo stakers, without handing any of them unilateral control over a validator.
Community Staking Module
CSM is the permissionless entrance. Anyone can post an ETH bond and run validators for the protocol, earning roughly 6% of the rewards from each 32 ETH validator plus yield on their own bonded stake. CSM v2 expanded the share of protocol stake this module can absorb, and DAO tokenholders approved a path toward 10% of total Lido stake flowing through it. It matters because the Pectra upgrade changed validator balance mechanics, and Lido's module structure is what lets it adapt without rewriting the core protocol.
What the LDO Token Controls
LDO has a fixed maximum supply of 1 billion, with roughly 836 million circulating as of August 2026 and no scheduled unlocks remaining. The vesting cliffs for the founding team, early investors and validator partners all cleared by 2024, so supply pressure now comes only from DAO treasury spending, which requires a governance vote.
The token's power changed materially in July 2025, when the DAO activated dual governance. Under that system LDO holders still propose and pass changes, but stETH holders can push back. Depositing more than 1% of stETH supply into a veto escrow triggers Veto Signalling, freezing a proposal for anywhere from 5 to 45 days depending on how much opposition accumulates. Cross 10% and the system enters Rage Quit, where governance stays paused until the objecting stakers have fully exited the protocol. The design gives the people whose capital is at risk a brake on the people who hold the votes, which is rare in DeFi governance and was the DAO's answer to years of criticism about LDO holders steering billions in stranger's ETH.
Value accrual has been the harder question. LDO conferred voting rights and nothing else for most of its life, and the token fell roughly 95% from its peak by early 2026. In March 2026 the DAO proposed routing part of staking revenue into automated LDO buybacks, with purchases triggered above defined ETH price and revenue thresholds, executed through auctions and parked in a DAO-controlled LDO/wstETH liquidity position on Curve. Whether that closes the gap between protocol revenue and token price is the central LDO thesis right now.
Lido V3, stVaults and the Multi-Product Turn
Lido V3 reached Ethereum mainnet on 30 January 2026, introducing stVaults: modular, non-custodial contracts that let an institution, rollup or protocol run a segregated staking setup with its own validators, its own risk parameters, and optional stETH liquidity on top. Day-one users included Linea and Nansen alongside several institutional stakers, and the DAO waived the 1% infrastructure fee on qualifying vaults through March 2026 to seed adoption.
The strategic logic is visible in the DAO's GOOSE-3 proposal, which frames 2026 as the year Lido stops being a single-product staking protocol and becomes a liquidity platform anchored by stETH, with stVaults targeting 1 million ETH and a validator marketplace called ValMart allocating stake on market terms rather than by DAO committee. It is a direct response to competition from restaking and yield-layered products. Protocols like EigenLayer and ether.fi spent 2024 and 2025 pulling capital toward higher-yield structures built on top of staked ETH, and Lido's counter is to make stETH the base layer those structures are built from.
Risks Every stETH Holder Should Price In
| Risk | What it means in practice |
|---|---|
| Peg deviation | stETH can trade below ETH during liquidity crunches. Redemptions now work, but exits queue, and forced sellers take the discount. |
| Slashing and operator error | Penalties from validator misbehaviour reduce stETH balances proportionally. The curated set limits but does not remove this. |
| Governance and legal | A California federal court ruled in Samuels v. Lido DAO that the DAO can be treated as a general partnership, exposing active governance participants to liability. Summary judgment briefing runs through late 2026. |
| Smart contract | Billions sit in upgradeable contracts. Audited, battle-tested, and still a live risk. |
| Concentration | Lido controlling a quarter of staked ETH remains a standing criticism from Ethereum researchers, and any protocol-level response would land on stETH holders first. |
The concentration debate deserves a note. Lido's share peaked above 32% in 2023 and has compressed to the low twenties as institutional stakers and treasury companies entered the market. That drift is a competitive loss and a decentralization win at the same time, and the DAO has been explicit that it will not self-limit. Meanwhile stETH remains the most widely accepted staking derivative in DeFi, taken as collateral on Aave and paired in the deepest liquidity pools of any LST, which is the moat the buyback proposal is ultimately trying to monetize.
Frequently Asked Questions
Is LDO the same as stETH?
No. stETH is the receipt token you get for staking ETH through Lido, and its value tracks ETH plus accrued rewards. LDO is the separate governance token used to vote on protocol decisions, and its price moves independently of ETH. Holding LDO gives you no claim on staked ETH.
What is the minimum amount of ETH I can stake with Lido?
There is no minimum. Lido exists specifically to remove the 32 ETH validator threshold, so any amount of ETH can be staked and converted into stETH. Gas costs are the only practical floor on very small deposits.
Can I unstake stETH back into ETH?
Yes. Lido V2 enabled direct withdrawals in May 2023, so stETH can be redeemed through the protocol for ETH. Processing time depends on the Ethereum exit queue and can range from hours to several days when demand is heavy.
Why has the LDO price fallen while Lido's TVL stayed large?
LDO historically captured no protocol revenue, functioning purely as a voting token while the 5% DAO fee accumulated in the treasury rather than flowing to holders. The 2026 buyback proposal is the DAO's attempt to link revenue to token demand, and its outcome is the main variable in the LDO investment case.
Is Lido still running on Solana and Polygon?
No. Lido wound down its non-Ethereum deployments, sunsetting Polkadot and Kusama in August 2023, ending Solana frontend support in February 2024, and exiting Polygon. The protocol is now Ethereum-only, a deliberate narrowing after the Terra collapse showed the cost of spreading across chains.
Why Lido Still Sets the Terms for Ethereum Staking
Lido's position rests on a network effect that is hard to replicate. stETH is the staking derivative that lending markets, DEXs and structured products were built around, and that integration depth keeps capital flowing in even as the headline yield compresses and rivals chip at market share. The open question is whether the DAO can convert an entrenched product into a token worth holding, which is what the buyback framework and the stVaults expansion are both trying to answer.
For traders, LDO is best understood as a leveraged bet on Ethereum staking volume and on Lido's governance executing the value-accrual pivot. It carries beta to ETH, sensitivity to staking-share headlines, and a legal overhang that has no precedent to price against. Position sizing should reflect all three.
You can buy LDO on the spot market or take a directional position with LDO perpetual futures on LeveX. More token breakdowns like this one live in Crypto in a Minute.