- MixBytes stops support for Lido on Polkadot protocol
- The overall termination of Lido on the network will finished by August
Lido, which is currently one of the largest DeFI ecosystems in the crypto-space, expanded its ecosystem to Polkadot in the latter half of 2021. This expansion of Lido onto the Polkadot ecosystem was led by a blockchain auditing firm known as MixBytes.
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However, MixBytes is in the news now after it made an announcement, one stating that it will stop support for Lido on Polkadot and Kusama. The reasons cited for the halt in services include – Market conditions, protocol growth, limited capacity, and priority alignment.
How did it all start?
The proposal to first launch Lido on the Polkadot network was introduced in August 2021. This proposal led to the creation of the staked versions of DOT and KSM, now known as stDOT and stKSM.
These assets gained a lot of popularity over the past year. At press time, there were 4,010,476 DOTs staked through the Lido protocol, which amounted to $22.6 million. Users who have staked their DOT through Lido will be the most affected after the latter leaves the Polkadot protocol.
What are the next steps?
The removal of Lido from the Polkadot network will happen in phases.
From the 15th of March, no new users would be allowed to stake their DOT through Lido. After the 15th of June, the rewards being paid out to current holders of stDOT and stKSM will be paused.
On the 22nd of June, unbonding will be enforced. Unbonding is a term used for when a user’s staked assets are freed up so that they can be moved around and sold in the crypto-market. Following the same, on the 24th of July, all the funds will be allocated to the parachain.
The official termination of the Lido and Polkadot partnership will occur on 1 August after all the previously mentioned phases are executed smoothly.
On the DOT
Polkadot network and its corresponding token – DOT – may register negative effects owing to these recent developments. In fact, there has been a noticeable decline in DOT’s price over the last two weeks and the announcement of the Lido update could exacerbate this trend.
Additionally, the volatility of DOT hiked over this period, adding to the unpredictability of its price movements.
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Coupled with that, the overall volume of the DOT token also fell on the charts.
It remains to be seen how the Polkadot network manages to overcome these challenges in the next few months.