Lido Finance had to activate its safety feature "Staking Rate Limit" after over 150,000 ETH was staked in a single day.
Liquid staking protocol Lido Finance has pushed the big red button in
order to activate a protocol safety feature called "Staking Rate Limit"
after more than 150,000 Ether was staked with the protocol in a single
day.
Lido is a liquid staking solution for digital assets, in this case allowing users to stake Ether
without them needing to have their tokens locked. When a user deposits
Ether, Lido issues them a liquid variant of ETH, known as staked ETH
(stETH), giving users staking rewards for each day the tokens are held
in their wallets.
Lido protocol has registered its largest daily stake inflow so far with over 150,000 ETH staked.
— Lido (@LidoFinance) February 25, 2023
Upon reaching this number, a curious (but important) protocol safety feature called Staking Rate Limit was activated.
Here’s how it works pic.twitter.com/ngBtWz7q18
According to the liquid staking protocol's Feb. 25 tweet, the "dynamic mechanism” was activated after the daily staking limit of 150,000 Ether was reached.
In a related
guide, Lido explained that the “safety valve” is aimed at limiting the
amount of staked ether (stETH) that can be minted during times of high
inflows, which is intended to address the possible ill side effects,
such as rewards dilution.
“This means it is only possible to
submit this much ether to the Lido staking contracts within a 24-hour
timeframe,” it explained.
The mechanic works by limiting the
amount that can be minted based on deposits within the last 24 hours,
replenishing capacity at the rate of 6,200 Ethereum
"It
works by decreasing how much total stETH can be minted at any one time
based on recent deposits, and then replenishing this capacity on a
block-by-block basis," Lido said.
Lido noted the Staking Rate Limit mechanism would affect "all parties who may try to mint stETH, regardless of approach."
Eagle eyed on-chain analyst Lookonchain shared a screenshot reportedly showing that the 150,100 ETH may have come from a single user, with three deposits 50,000 each, and one of 100.
According
to Lido Finance's website, as of Feb. 27, more than $8.9 billion ETH
has been staked with the protocol, up significantly from the $5.8 billion reported on Jan. 2.
Related: SEC’s crypto staking crackdown has uncertain consequences for DeFi: Lido Finance
The
latest development from Lido comes as Ether staking volumes have
reportedly continued to rise as the Shanghai upgrade nears. The Ethereum
Shanghai upgrade or the "Ethereum Shanghai fork," is due in mid-March,
leading to speculation about what could happen to the ETH price.
One of the five planned upgrades,
EIP-4895, is expected to unlock staked ETH and allow withdrawals,
potentially leading to increased liquidity in the crypto market.
$25 billion of ETH has been staked since the Beacon Chain was launched and introduced staking to ETH in December, 2020.
source link : https://cointelegraph.com/news/lido-finance-activates-staking-rate-limit-after-more-than-150-000-eth-staked
