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Lido Finance and Optimism are rolling out a new incentive program to get liquid stakers migrated over to the layer-2 network.
As part of the LidoOnLayer2 initiative, which seeks to improve liquidity for Lido’s staked Ethereum (stETH) product across all layer-2 solutions, the project has been granted 1 million OP tokens from Optimism.
These tokens will provide an added OP reward for users who stake their Ethereum with Lido, move that staked Ethereum to Optimism, and provide liquidity for select token pairs. The program kicks off today and ends in six months.
OP is the governance token for Optimism, a layer-2 scaling solution that uses rollups to help scale the Ethereum network by moving activity off of the mainnet, batching it, and then executing this compressed data on the mainnet.
Lido Finance is the market’s largest liquid staking platform, letting users deposit a variety of proof-of-stake (PoS) tokens and earn rewards for doing so. Instead of needing 32 ETH, a whopping $49,000 today, to begin staking on Ethereum, users can instead deposit any amount into Lido and begin earning. The service is also available for Polygon, Solana, Polkadot, and Kusama.
How does the Optimism, Lido program work?
In exchange for their ETH deposits, Lido users get the stETH token in return, which can then be used elsewhere in DeFi to earn yield or to borrow against.
Via this new arrangement with Optimism, users who choose to move their stETH over to the layer-2 network will now earn additional rewards in the form of Optimism’s native OP token.
Importantly, users won’t be migrating stETH to Optimism. Instead, as per Lido’s expansion to a variety of different layer-2 networks, wrapped stETH (wstETH) will be the available asset. This specific asset is more compatible and easier to integrate with crypto protocols.
“The value of wstETH on Optimism is that it further democratizes access to liquid staking for those who do not want to pay or cannot afford to pay mainnet fees,” said Lido’s head of business development and partnerships Jacob Blish. “By incentivizing great wstETH liquidity on Optimism, furthering adoption and contributing to the security of the ecosystem.”
Thus, users interested in scooping up this extra OP yield can do so if they turn to what Lido has called “priority pairs,” namely wstETH-ETH as well as a host of other stablecoin pools.
Lido has named Aave, for example, as one project that would benefit from the program. This means that users that deposit their wstETH on the popular DeFi lender via Optimism can earn an additional yield in OP tokens.