Lido, a liquid staking protocol, has recently made a significant move by approving the deployment of its Wrapped Staked Ether (wstETH) on Coinbase’s Base network. This decision, which was announced on November 8, opens up new possibilities for users to trade and use wstETH in various decentralized finance (DeFi) applications.
Lido enables users to stake cryptocurrencies while still being able to use them in DeFi applications. For Ethereum’s native coin, Ether (ETH), Lido issues a derivative token called “Lido taked Ether (stETH)” on the Ethereum network. However, when stETH is sent to other networks through a bridge, it needs to be wrapped to create a double derivative token, known as “Wrapped Staked Ether (wstETH).”
Before November 8, there was no official version of wstETH available on the Base network. However, on October 17, Kyberswap announced that the Beefy Finance team had deployed an unofficial version of wstETH on Base. To make this version official, the two teams proposed for the DAO to take control and accept ownership of it.
The proposal made by Kyberswap and the Beefy Finance team was approved by the governing body of Lido, known as the DAO, on November 2. A total of 597 million votes were cast in favor of the proposal, while 255 votes were against it. This official endorsement marks a significant milestone in scaling wstETH adoption.
The availability of wstETH on the Base network is seen as a crucial step in addressing scalability limitations and meeting the growing demand for decentralized staking within the broader Ethereum ecosystem. Marin Tvrdić, a contributor to LidoDAO, commented that expanding the protocol’s network of compatible Layer 2 (L2) bridges plays a vital role in bridging this gap.
While the deployment on Base has received support from LidoDAO members, it’s worth noting that not all versions of wstETH have been officially accepted. LayerZero has launched a wstETH version for Avalanche, BNB Chain, and Scroll, but it has faced criticism for being considered proprietary by multiple protocols. The DAO is still debating the acceptance of this version, and a vote has not yet been taken.
The approval of the deployment of Lido’s wstETH on Coinbase’s Base network opens up new opportunities for DeFi applications. This milestone contributes to the broader Ethereum ecosystem by addressing scalability issues and meeting the increasing demand for decentralized staking. While the debate regarding other versions of wstETH continues, Lido’s progress in expanding its network of compatible Layer 2 bridges is commendable.