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Lido Finance, a prominent decentralized staking protocol, has officially announced the cessation of its staking services on the Polygon network due to limited user adoption and shifting dynamics within the decentralized finance (DeFi) ecosystem. As of December 16, Lido users can no longer stake MATIC on Polygon, although they can withdraw their previously staked tokens through the Lido interface until June 16, 2025.
The Lido on Polygon sunset process has begun.https://t.co/icgidJsbqF
— Lido (@LidoFinance) December 16, 2024
See below for an overview of upcoming timelines and requirements 📆📜
The decision comes after a community vote, with 99% of Lido DAO Token (LDO) holders supporting the move. In a blog post, the Lido team explained that the shift in focus towards Ethereum was driven by challenges on the Polygon network, including resource-intensive maintenance and a diminishing demand for Polygon’s proof-of-stake (PoS) model. Lido’s exit is also influenced by the growing focus on zkEVM solutions within DeFi, which has impacted the demand for liquid staking solutions on Polygon PoS.
The Polygon network, initially seen as a strong contender for DeFi adoption, has seen a decline in interest for liquid staking as other solutions emerged, diminishing its role as a foundational DeFi building block. Shard Labs, the team that initially introduced Lido staking to Polygon in 2021, noted that the migration towards zkEVM has significantly shifted the landscape, leading to reduced demand for liquid staking.
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Lido’s withdrawal from Polygon is a strategic move to concentrate resources on Ethereum, where it has experienced significant success. Lido is the largest liquid staking protocol in DeFi, with a total value locked (TVL) of $38 billion as of December 16, according to DefiLlama data. Meanwhile, the Polygon network has a TVL of over $1.2 billion. Lido’s suspension of staking operations follows a similar exit from the Solana blockchain, where it ceased operations last year due to low fees and unsustainable financials.
Users on Polygon can still withdraw their staked MATIC through the Lido interface until mid-2025, though all rewards have been discontinued. A temporary suspension of withdrawals is expected from January 15 to January 22, 2024. Following this period, withdrawals can only be processed through browser tools.
As Lido redefines its focus on Ethereum, the move reflects broader shifts in DeFi, where evolving technologies and changing user preferences continue to shape the future of staking and liquid assets.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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