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Lido Finance, recognized as the leading liquid staking protocol on Ethereum, upgraded to version 2 earlier this week. This update effectively allowed users of liquid staking, specifically holders of staked ether (stETH), to convert stETH to ETH from Lido at a 1:1 ratio.
Recent data indicates that merely 0.42% of the withdrawal requests have been fulfilled thus far.
Consequences of the V2 Upgrade
As per estimates from 21Shares, a firm based in Switzerland, Lido Finance currently holds 31% of the total ETH that has been staked. The total supply of stETH is approximately 6.7 million, with 448.04k stETH having been submitted to Lido for withdrawal requests.
Celsius Network, the insolvent centralized finance lender, represents the majority with around 448.04 stETH in withdrawal requests, according to data from on-chain analytics provider Dune.
In the meantime, Lido possesses a buffer of 470k ETH to manage the withdrawals, which stem from execution layer rewards (Priority Fees/MEV), partial withdrawals, and daily ETH contributions from new stakers via the staking platform. With only 0.42% of the withdrawals processed to date, the analysis by 21Shares suggests that Lido may not need to exit any validators from the network to fulfill all withdrawal requests.
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“Given the current volume of $stETH requested for withdrawal, Lido will not need to exit any validator from the network to fulfill all the withdrawals and will still retain 20k $ETH as a buffer.”
Lido Finance Activating Withdrawals
Lido Finance, which has a total value locked (TVL) exceeding $12.41 billion, launched its v2 version on May 15th. This decision was made through an on-chain vote, where community members discussed the proposal.
The upgrade, which features lower gas fees and improved security protocols, was implemented a month following the Shapella hard fork that enabled staking validators to withdraw Ether. Lido’s V2 underwent a total of nine audits conducted by various firms, including Statemind and MixBytes.
Conversely, Celsius unstaked $779 million worth of ETH it had with the liquid staking derivatives protocol. The movement of funds by the troubled crypto lender was speculated to be part of its restructuring and creditor repayment strategies.
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