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- Lido Finance has decided to phase out operations on Solana.
- This marks another blockchain shifting base from one protocol to the other.
Renowned multi-platform staking solution Lido Finance has announced plans to discontinue operations on the Solana blockchain. The decision was made after a rigorous Decentralized Autonomous Organization (DAO) forum discussion and a voting process that involved members of the community. The sunsetting of Lido on Solana protocol is scheduled to gradually happen in the coming months
According to a blog post by Lido, Yuri Mediakov and the Peer-to-peer (P2P) team, which is recognized for their contributions to the Lido DAO as well as the development of Lido on Solana since March 2022, presented a proposal to the Lido DAO on September 5th. In this proposal, achievements, challenges and future prospects of Lido on Solana were outlined. Furthermore, the P2P team presented two possible solutions to address Lido’s issues on Solana.
Lido was left with the option to either continue development on the Solana blockchain while enjoying financial backing from the Lido DAO or to phase out the protocol. Upon approval to phase out, the process is proposed to happen in the space of five months with a monthly allocation of $20,000 to address maintenance expenses. The proposal was put up for voting four weeks after it was proposed. Markedly, this time was given to allow the community enough time to engage in discussions.
The choice to sunset was made after an extensive discussion and a vote by Lido DAO members. It was a difficult decision for the protocol considering its relationship with Solana and its ecosystem. At the same time, Lido realised that it was the best decision for the progress of its broader ecosystem. Currently, no new staking of Lido on Solana is allowed.
In addition to the sunsetting of Lido on Solana, the protocol named November 17th as the potential date for the commencement of the voluntary process of node operator off-boarding. It is also expected that February 4th, 2024 will mark the end of Lido on Solana Frontend support. Once this is done, unstaking can only be conducted via the Command Line Interface (CLI).
Impact of Lido Sunsetting on Solana
The exit of protocols from one blockchain to another is fast becoming a trend. Last month, Rune Christensen, co-founder and Chief Executive Officer (CEO) of the MakerDAO protocol announced a proposal to build the Decentralized Finance (DeFi) project “NewChain” off a fork on Solana rather than the Ethereum Virtual Machine (EVM) which it normally utilizes.
It is not yet clear how the news of Lido sunsetting would impact the price of the Solana token SOL and its ecosystem. At the time of this writing, SOL is performing significantly well with a 4.22% price surge in the past 24 hours. With the surge, SOL is now trading at $24.11.
Shortly before this time, talks about FTX’s plan to liquidate its substantial cryptocurrency holdings including over $1 billion worth of SOL had posed a potential threat to the price of the coin. However, the FTX estate decided to stake a staggering 5.5 million of SOL tokens worth $122 million and this removed the fear of liquidation.