Lido Protocol Reveals Plans For Withdrawal Function Ahead Of Shanghai Ethereum Hard Fork

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As the Ethereum community prepares for the upcoming Shanghai hard fork in March, the development team of the Lido liquid staking project has revealed plans to create a withdrawal function in the protocol. The Lido team is seeking community feedback on the proposal that would allow withdrawals once the Shanghai upgrade is complete.

Lido dominates Challenge economy with $7.9 billion in total value locked, team braces for Shanghai withdrawals

At the time of writing, the decentralized finance (defi) liquid staking protocol Lido is the most dominant defi protocol today, in terms of total value locked (TVL). Statistics from defillama.com show that the Lido’s $7.92 billion TVL dominates the $46.56 billion TVL held in challenge today by approximately 17.01%.

Lido is the largest holder of staked ethereum, as the protocol commands around 29% of the staked ether supply. Lido’s Ethereum derivative token, STETH, is the 13th-largest market valuation in the cryptocurrency economy at $7.73 billion. Additionally, Lido has a governance token called lido dao (LDO), which has a market capitalization of around $1.96 billion on January 25, 2023. The day before, Lido’s development team released a proposal regarding withdrawals after the Shanghai upgrade.

Diagram of the Ethereum reduction sanctions timeline highlighted in the Lido protocol compliant withdrawal proposal.

Ethereum developers are determined to make the Shanghai hard fork happen in March and the main goal is to enable staked withdrawals. “The design proposed by Lido in the Ethereum Protocol Engineering team addresses these challenges with the in-protocol withdrawal request queue,” the Lido team explains in a summary of the landscape of withdrawals through the Lido protocol. “The process must be asynchronous, due to the asynchronous nature of Ethereum withdrawals,” the Lido developers add.

The Lido developers explain that there would be different withdrawal modes, including a “turbo” function and a “bunker” function. Other penalties and cuts would be codified for validators who break the rules. The summary explains how slashes affect the processing of a user’s withdrawal request.

“We are seeking community feedback to ensure that our proposal takes into account all important considerations and to identify potential improvements,” details the Lido team. “Your feedback is invaluable in creating an effective, efficient and fair proposal for all stakeholders.”

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What do you think of Lido’s proposal for protocol-compliant withdrawal requests and the upcoming Shanghai hard fork? Do you think this feature will have a significant impact on the crypto and challenge market? Share your opinions in the comments below.

Jamie Redman

Jamie Redman is the news manager for Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 6,000 articles for Bitcoin.com News about disruptive protocols emerging today.

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