Lido DAO: Liquid Staking For Ethereum 2.0.pdf

Lido DAO builds a liquid staking service for Ethereum, allowing users to earn staking rewards without locking assets or maintaining staking infrastructure.
- Timing: Lido staking is set to commence alongside Ethereum 2.0's Phase 0 launch in December 2020.
- Risks of Early Ethereum 2.0 Staking: High market risk due to frozen staked assets until transfers are enabled (expected in Phase 1.5 or Phase 2, at least a year away).
- Lido Solution: Users deposit Ether into Lido smart contracts, receiving stETH (tokenized staked Ether) in return. DAO-controlled smart contracts stake tokens with DAO-picked node operators. stETH is liquid and transferable, unlike staked Ether.
- Fees and Rewards: Lido applies a 10% fee (variable by DAO) on staking rewards, split between node operators, the DAO, and a slashing insurance fund. Rewards are calculated based on total staked Ether, plus rewards, minus slashing penalties.
- Advantages over Self-Staking and Exchange Staking: Lido offers more flexibility, allowing staking with any deposit size without asset freezing or withdrawal restrictions. It also provides full audibility of staked Ether and does not rely on a single party's private key management.
- DAO Governance: Lido DAO is a decentralized organization that manages the liquid staking protocol. It allows for competitive products without full centralization or exchange custody. The DAO is responsible for protocol upgrades, insurance provider selection, and fee distribution.
- Goals: Lido aims to allow users to earn staking rewards without fully locking their Ether, reduce staking risks, provide stETH as a building block for other applications, and offer an alternative to exchange staking and self-staking.