Lido on Solana Decides to Wind Down Operations, Citing Necessity Amid Low Fees

  • Lido Finance discontinues Solana operations after community vote.
  • Financial challenges and low fees led to this decision.
  • Lido token holders overwhelmingly supported sunsetting Solana.
  • The protocol will now focus on Ethereum and Polygon staking.

Sunsetting Solana: Lido’s Tough Decision

Lido Finance, a decentralized liquid staking protocol, has made the decision to discontinue its operations on the Solana blockchain following a community vote within Lido’s decentralized autonomous organization (DAO). The proposal to sunset Lido on Solana was initially introduced by Lido’s peer-to-peer (P2P) team on September 5, citing financial sustainability issues and low fees generated by the protocol on Solana. The voting process began on September 29 and concluded on October 6.

“After extensive DAO forum discussions followed by a community vote, the sunsetting of the Lido on Solana protocol was approved by Lido token holders, and the process will commence shortly,” explained Lido in a post dated October 16. As of October 16, Lido ceased accepting staking requests, and voluntary node operator off-boarding is scheduled to commence on November 17. Lido users will be required to unstake their assets on Solana’s frontend by February 4. After this date, unstaking will need to be done using the command-line interface (CLI).

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Reasons for the Shift

The initial proposal sought $20,000 per month from Lido DAO to support the technical maintenance efforts required to sunset operations on Solana over the next five months. Lido’s P2P team had been actively involved in Lido’s Solana project since acquiring it from Chorus One in March 2022. During their stewardship, the team invested approximately $700,000 into Lido on Solana, generating $220,000 in revenue but resulting in a net loss of $484,000, as reported by the proposal’s author, Mediakov.

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Token Holder Support: Overwhelming Vote for the Change

The alternative option in the September 5 proposal was to allocate more funding to Solana from Lido DAO. However, an overwhelming majority of LDO token holders, with 92.7% in favor, voted for the sunsetting of operations on Solana, as recorded on the open-source voting platform Snapshot. Lido emphasized that this decision, though challenging, was deemed necessary.

Lido’s Focus on Ethereum and Polygon

Lido confirmed that staked Solana (stSOL) tokenholders will continue to receive network rewards throughout the sunsetting process. Currently, Lido’s staking services are exclusively supported on Ethereum and Polygon, with $14 billion and $80 million staked, respectively.

Lido initially launched on Solana on September 8, 2021, when Solana’s SOL token was priced at $189, marking a significant contrast to its current price of $24, as per CoinGecko data. Despite this announcement, SOL has seen an 8.6% increase in value over the last 24 hours.

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