Feb 27, 2023

Lido Finance Activates Staking Rate Limit After $8.9B ETH Staked

Lido Finance, a liquid staking solution for digital assets, activated a protocol safety feature called “staking rate limit” after more than 150,000 Ether (ETH) was staked with the protocol in a single day. The feature is intended to address any potentially negative effects, such as rewards dilution, that could arise from such high inflows.

As of Feb. 27, more than $8.9 billion in ETH has been staked with the protocol, up significantly from the $5.8 billion reported on Jan. 2. The dynamic mechanism was activated after the daily staking limit of 150,000 Ether was reached.

The “staking rate limit” works by limiting the amount that can be minted based on deposits within the last 24 hours, replenishing capacity at 6,200 ETH per hour. It works by decreasing how much total stETH can be minted at any one time based on recent deposits, and then replenishing this capacity on a block-by-block basis.

An on-chain analyst has discovered that 150,100 ETH may have come from a single user, with three deposits of 50,000 each and one of 100. Lido noted the staking rate limit mechanism would affect “all parties who may try to mint stETH, regardless of approach.”

The latest development from Lido comes as Ether staking volumes have reportedly continued to rise as the Shanghai upgrade nears. The Ethereum Shanghai upgrade is due in mid-March, leading to speculation about what could happen to the price of Ether.

One of the five planned upgrades, EIP-4895, is expected to unlock staked ETH and allow withdrawals, potentially leading to increased liquidity in the crypto market. Since the Beacon Chain was launched and introduced staking to ETH in December 2020, $25 billion of ETH has been staked.

The introduction of the staking rate limit mechanism is an important development for the web3 space, as it shows that protocols are taking the necessary steps to ensure their safety and security. It also provides users with peace of mind that their funds are secure, and that they can trust the protocols they are using.

Furthermore, the rise in Ether staking volumes is a positive sign for the crypto market, as it indicates that more investors are recognizing the potential of staking their tokens to earn rewards. It also shows that the Ethereum network is becoming more secure and reliable as it continues to grow and mature.

The staking rate limit mechanism is a great example of how protocols are taking the necessary steps to ensure their safety and security. With the Ethereum Shanghai upgrade on the horizon, it will be interesting to see how NFTs, crypto, and web3 agencies take advantage of the increased liquidity to promote and sell their NFTs.

Twitter NFT marketing and NFT promotion agencies have already begun to capitalize on the increased liquidity, offering their services to help artists and creators market their NFTs. With the right NFT marketing agency, creators can reach a larger audience and potentially increase their sales.

The introduction of the staking rate limit is an important step in the evolution of the web3 space, and it will be interesting to see how it impacts the market in the coming months. As more investors recognize the potential of staking their tokens to earn rewards, the crypto market could become more secure and reliable, and NFTs could become even more popular.

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