The Complete Guide to LidoDAO (LDO) - Innovation in Ethereum Staking
Hello! Are you curious about LidoDAO (LDO), which has recently been attracting a lot of attention in the DeFi ecosystem? Today, we will take a closer look at LidoDAO, which is leading the innovation of Ethereum staking. I will explain it step by step so that even those who are new to cryptocurrency can easily understand it!
What is LidoDAO (LDO)? - A New Paradigm in Ethereum Staking
LidoDAO can be called a game changer in the Ethereum 2.0 era. Traditionally, staking Ethereum required at least 32 ETH (currently worth about 60 million won), and the staked ETH was completely locked and unusable. It was like putting money in a time deposit and not being able to withdraw it until maturity.
However, LidoDAO solved all these problems! You can stake even with small amounts, and instead of the staked ETH, you can receive a token called stETH, which can be used elsewhere. It's like an innovation that allows you to use a time deposit certificate as collateral elsewhere.
To explain specifically, LidoDAO collects ETH from multiple users and stakes them on their behalf. For example, if A deposits 1 ETH, B deposits 3 ETH, and C deposits 5 ETH, Lido will combine them and stake them in units of 32 ETH. And it is a system that distributes staking rewards according to the ratio of each person's stake.
Current status of LidoDAO (as of 2025)
Total staked ETH: Approximately 9 million ETH or more
Approximately 30% of total Ethereum staking
Cumulative number of users: More than 400,000
LidoDAO's exciting history and growth story
LidoDAO's history begins in December 2020. At that time, the staking era began with the launch of the Ethereum 2.0 Beacon Chain, but the entry barrier was too high for general investors. This was due to the high minimum amount of 32 ETH and technical complexity.
The Lido team was the one who stepped forward to solve this problem. The original founding members, Konstantin Lomashuk and Vasiliy Shapovalov, were long-time developers in the Ethereum community.
Key milestones in LidoDAO growth:
• December 2020: Lido Mainnet launch
• January 2021: First distribution of LDO tokens
• Summer 2021: Rapid growth with the DeFi boom
• 2022: Reaching the top staking pool
• 2023: Responding to the Ethereum Shanghai upgrade
• 2024-present: Multi-chain expansion and ecosystem diversification
What’s particularly impressive is how Lido has evolved into a true DAO (Decentralized Autonomous Organization). What started out as a project with just a few developers has now become a democratic governance system where thousands of token holders around the world determine the direction of the project.
Lido has seen explosive growth in the DeFi (Decentralized Finance) craze of 2021. As people realized that they could earn additional income from other DeFi protocols by accepting stETH, Lido’s TVL (Total Value Locked) has grown by hundreds of millions of dollars per day.
How LidoDAO Works - Complex Technology Made Simple
To understand how LidoDAO works, let’s use a real-world example. Let's say Kim has 10 ETH and wants to stake it to earn income.
Problems with traditional staking:
1. Cannot stake directly because he does not have 32 ETH
2. Creating a pool with others requires complex technical knowledge
3. Staked ETH is completely locked and cannot be used
4. Uncertainty about when it can be retrieved
Smart way using LidoDAO:
1. Kim stakes 10 ETH on Lido's website
2. Receives 10 stETH immediately (1:1 ratio)
3. stETH increases daily by the staking reward (currently around 3-4% annualized income)
4. Can additionally utilize stETH in other DeFi protocols
5. Can use stETH at any time Exchangeable for ETH and Cashout
Lido's core technology is the 'Decentralized Validator Network'. Instead of staking all ETH in one place, Lido distributes it to 30 or so verified validators around the world. This disperses the risk, and even if a problem occurs in one place, it will not have a major impact on the entire system.
Lido also operates a unique system called 'Social Slashing Insurance'. If a validator makes a mistake and loses ETH, Lido's insurance fund will compensate for it. This insurance fund is created from a portion of the staking rewards and the proceeds from the LDO token sale.
Various Use Cases and Real-World Use Cases of LidoDAO
stETH can be used for more than just storing it. In fact, many DeFi users are using stETH to generate additional income.
1. Collateral Lending:
You can borrow USDC or DAI stablecoins using stETH as collateral on lending platforms like Aave and Compound. For example, you can put in 100 stETH as collateral and borrow $150,000 worth of USDC, which you can use for other investments.
2. Liquidity Providing:
You can earn trading fee income by providing liquidity to the stETH/ETH pool on decentralized exchanges like Curve and Uniswap. In particular, Curve's stETH pool is very popular, and you can earn an additional 5-8% per year.
3. Arbitrage:
Sometimes the market price of stETH is slightly lower than ETH. At this time, you can buy stETH cheaply and exchange it for ETH later to make a profit. Of course, there are risks, but it is a strategy that experienced traders often use.
Actual user reviews:
""I staked 50 ETH on Lido last year, and received stETH, half as liquidity on Curve, and half as a loan on Aave to invest additionally. I was able to get much higher returns than simple staking!"" - Real user A
4. Tax optimization:
Some countries have different tax treatment for staking rewards and DeFi profits. Using stETH can sometimes create a more favorable tax structure. (However, this varies by country, so consult a tax professional!)
Complete guide to LidoDAO exchanges and how to purchase
If you want to buy LDO tokens, you have several options. Each exchange has its own pros and cons, so you can choose the one that best suits your situation.
Major centralized exchanges (CEX):
• Binance: Largest trading volume in the world, various trading pairs
• Coinbase: US-based, highly reliable
• Kraken: User-friendly in Europe
• Upbit: Most convenient for Korean users
• Huobi: Strong in Asia
How to use a decentralized exchange (DEX):
Trading on a DEX allows you to trade without KYC (identity verification) and trade a wider range of tokens:
• Uniswap: The most popular DEX, easy to use
• SushiSwap: Provides additional reward tokens
• 1inch: Compares multiple DEXs to provide the best price
• Curve: Specializes in stETH/ETH trading
Things to watch out for when using DEX:
1. Check gas fees: Gas fees can be very high when the Ethereum network is congested
2. Set slippage: When trading volume is high, you need to set the slippage appropriately
3. Beware of fake tokens: Always check the official contract address
4. Protect MEV: Consider using Flashbots or other MEV protection services
How to participate in staking:
In addition to purchasing LDO tokens, you can also stake ETH directly on Lido:
1. Go to the official Lido website (lido.fi)
2. Connect your MetaMask wallet
3. Enter the amount of ETH you want to stake
4. Approve the transaction
5. Automatically receive stETH tokens
Active LidoDAO community and governance participation
One of LidoDAO's greatest prides is its active and professional community. Developers, investors, and researchers from all over the world come together to shape the future of the project.
Main community channels:
• Discord server:
The most active communication space, where you can ask questions and get answers in real time. Developers also participate directly and answer technical questions. The #general, #support and #governance channels are particularly popular.
• Research Forum (research.lido.fi):
This is where in-depth discussions about new proposals and technical improvements take place. Community proposals are submitted in the form of LIP (Lido Improvement Proposals), and actual development is carried out based on these.
How to participate in governance:
1. Hold LDO tokens: You must hold LDO to obtain voting rights
2. Snapshot voting: Most routine voting is done on Snapshot
3. On-chain voting: Important decisions are voted on the Ethereum on-chain
4. Delegate system: If you have difficulty voting directly, you can delegate your voting rights to someone you trust
Recent major governance issues:
• Improving validator selection criteria: Building a more decentralized and secure validator network
• Fee structure Optimization: Fee pricing that is favorable to both users and the protocol
• Multi-chain expansion: Discussing expansion to other chains such as Polygon and Solana
• Security enhancements: Expanding smart contract audits and insurance funds
The fun part about community participation is that your voice can actually be reflected in the project. Last year, a community member proposed the ‘Staking Reward Auto-Reinvestment’ feature, which was actually implemented!
Wallet Guide for Safe LidoDAO Asset Storage
Securing your LDO tokens and stETH is just as important as investing. Understand the characteristics of each wallet and choose the wallet that suits your situation.
Hardware wallets (highest security):
• Ledger Nano S/X: The most popular hardware wallet, supports stETH
• Trezor: Open source, transparent security
• Keystone: QR code-based air-gap security
Pros: Almost no risk of hacking, offline storage
Cons: Initial cost, requires connection every time to use DeFi
Software wallets (balance of convenience and security):
• MetaMask:
An officially supported wallet by Lido, available on both web browsers and mobile apps. It automatically recognizes stETH tokens and is very convenient to integrate with DeFi protocols. However, since it is browser-based, you should be careful of phishing attacks.
• Trust Wallet:
It is a mobile-centric wallet that supports various chains. It is especially recommended for those who use DeFi a lot on mobile. You can directly access Lido with the built-in DApp browser.
• Argent:
It is an innovative wallet that has a social recovery function so you can recover your seed phrase even if you lose it. Especially recommended for DeFi beginners, Lido staking is also possible right in the app.
Essential wallet security checklist:
✅ Back up your seed phrase offline in multiple places
✅ Set up 2-step authentication (2FA)
✅ Regular software updates
✅ Avoid connecting to suspicious DApps
✅ Use hardware wallets for large amounts
✅ Be careful of downloading fake wallet apps
Risk factors you must know when investing in LidoDAO
LidoDAO is a great project, but like all investments, there are risks. It is important to understand and prepare for these risks in advance for a smart investment.
1. Smart Contract Risk:
If a bug or vulnerability is found in Lido's smart contract, there is a risk of losing your deposited ETH. Of course, Lido has been audited several times and operates an insurance fund, but it is not completely risk-free.
2. Smart Contract Risk