Lido Community Approves Bridging wstETH Onto BNB Chain

Wrapped staked ETH (wstETH), the wrapped version of Lido’s dominant liquid staking token, stETH, is set to enter the BNB Chain ecosystem.

On Aug. 9, the Lido community unanimously approved a proposal to bridge wstETH onto BNB Chain, with Wormhole and Axelar providing the canonical bridge. Voter cast 50 million LDO in favor of the proposal.

“Initiated by Lido community demand, this cross-chain connection will unlock new liquidity and bolster builders across ecosystems once the connection is live,” an announcement said. “After testing and user interface updates, Lido’s BNB connection will exist as a public good, with contracts owned and controlled by the Lido DAO.”

The price of LDO, Lido Finance’s native token, briefly surged to $1.13 from $1.03 shortly before the news broke, and has since retraced to $1.06 for a daily gain of 2.5%, according to CoinGecko. However, the asset has performed dismally in the past 30 days amid turmoil in the broader cryptocurrency and mainstream markets, with LDO down 37% in the past month and 42% in 2024.

Wormhole’s W token is up 3.3% at $0.22, while Axelar’s AXL token jumped 2.3% to $0.56.

Lido is the largest liquid staking provider with a total value locked (TVL) of $26.1 billion, while BNB Chain hosts the fourth largest DeFi ecosystem with $4.27 billion, according to DeFi Llama.

The vote notably greenlit a cross-chain bridging solution leveraging tech from two rival interoperability protocols in Wormhole and Axelar. This means two competing protocols will collaborate on the architecture facilitating cross-chain wstETH transfers between Ethereum and BNB Chain.

“This integration marks an industry-first collaboration on a joint cross-chain connection between Wormhole and Axelar, starting with one of the most systemically important assets in crypto in wstETH,” said Dan Reecer, co-founder of Wormhole Foundation.

Bridging wstETH to BNB Chain also marks stETH’s first expansion onto another Layer 1. Previously, wstETH could only be bridged between Ethereum and seven Layer 2 networks, including Arbitrum, Optimism, Polygon, Base, Linea, zkSync, and Mantle.

Native staking describes providing collateral in the form of a Proof of Stake network’s native asset to operate a node and secure the chain. Stakers earn the native asset as rewards for validating the network’s transactions. Natively staked assets are locked up and non-transferable, meaning users must unstake their funds in order to trade their assets or use them in DeFi.

Liquid staking protocols provide stakers with tokens representing their underlying staked assets that directly accrue staking rewards and can be redeemed in exchange for their staked funds. These liquid staking tokens (LSTs) allow holders to access the value of their staked assets to generate yield via DeFi protocols. Holders can also instantly trade their staked assets on an exchange — allowing sellers to avoid the delays associated with natively unstaking funds while letting buyers bypass the need to launch and operate a node in order to accrue staking reward.

Liquid staking ranks as the largest DeFi segment, hosting $42.6 billion of the $126.8 billion currently locked in DeFi protocols. Money market lending protocols come in second with $31.4 billion, followed by decentralized exchanges with $17 billion.