Contributor: Lido gives a detailed walkthrough over how to stake Ethereum using their platform.
This article is to act as a tutorial for new Lido users or for anyone wishing to stake their Ethereum tokens for daily rewards.
How to Stake Ethereum?
Staking is the process of depositing ETH to validators to secure the Ethereum network. Validators are responsible for storing data, processing transactions and adding new blocks to the Ethereum blockchain. By doing so, validators earn ETH in rewards. This is currently available on Ethereum 2.0 (ETH2), the proof-of-stake blockchain coordinated by the beacon chain. Ethereum current proof-of-work system will eventually merge with Ethereum 2.0 in the near future.
Staking on ETH2 are possible through two means: if you have more than 32 ETH, you can stake individually by running your own validator, using the Eth2 launchpad; if you possess less than 32 ETH and wish stake, you can delegate it to a staking pool.
What Is Lido?
Lido is an Ethereum-based liquid staking solution supported by leading blockchain staking providers.
Lido lets you stake any amount of Ethereum — with no need to run complex infrastructure — while giving you the ability to deploy your staked ETH across DeFi applications like Curve, Sushi, Yearn and more. This removes the need for stakers to make a choice between staking Ethereum and participating in DeFi.
When staking with Lido, users receive staked ETH (stETH) in return. StETH represents the value of your initial staking deposit plus daily staking rewards, increasing in balance daily as rewards come in. These stETH balances can be used like regular ETH to earn yields and lending rewards.
Lido’s goal is to remove a number of problems associated with staking Ethereum, namely illiquidity, immovability and inaccessibility. By staking with Lido you can maintain full control of your staked ETH — staking any amount and unstaking any time — without the worry of a long-term lock up.
Benefits of Staking With Lido
Lido lets users stake their ETH without removing the ability to trade, use or unstake their tokens.
Lido is a liquid staking protocol that is non-custodial — as you maintain full control over your assets — and comes with significantly more flexibility than self-staking.
For more information on this, read our CoinMarketCap article on liquid staking and its benefits.
The primary goals of Lido are as follows:
- Let users earn staking rewards without the need to lock up tokens;
- Let users earn rewards on as small a deposit as users want. No need to stake 32 ETH;
- Reduce the risks of losing staked funds through software failures or slashing;
- Develop stETH as a building block for the DeFi space (e.g. as lending collateral on ARCx or for yield farming on Curve Finance);
- To provide an improved alternative to exchange staking and self-staking for the benefits of the Ethereum community.
Staking Ethereum With Lido
Users can stake their Ethereum with Lido at the click of a button to earn 8% APR on their tokens. The beauty of Lido, relative to many other staking protocols, is that you can unstake at any time with no consequences.
To stake your Ethereum with Lido, follow these steps:
1. Visit stake.lido.fi and press “Connect Wallet.”
2. When shown wallet options, choose preferred option and connect. With your wallet connected, you can now view your balances.
3. Enter the amount of ETH to stake and press “Stake.”
4. Confirm the transaction using your wallet.
5. Your wallet will now contain stETH representing your staked deposit. Your stETH balance is updated daily to reflect staking rewards.
The Lido DAO collects a 10% fee from rewards which goes towards improving the range of services provided by Lido, as well as providing our users with insurance against potential slashing risks.
The Lido DAO
Lido is managed by the Lido DAO, which is a community that builds the tools and services needed to stake Ethereum. The Lido DAO members govern the Lido protocol to ensure its constant stability and growth.
Besides technical development on the platform, the Lido DAO works to promote Lido and recruit users, node operators, validators and more through educational content and protocol promotion.
The Lido DAO is a flexible solution relative to self-staking due to the removal of the technical complexities needed for self-staking. In addition to this, Lido allows stakers to earn rewards on as small a deposit as they want — down to 0.00001 ETH — without any restrictions on the number of ETH needed to stake.
Lido is the logical compromise for users seeking a flexible, effective staking solution which still contributes benefits to the decentralization of the Ethereum network.
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