Lido commences closing down Polygon PoS chain staking service

Lido has officially begun the phase-out of its staking services on the Polygon Proof-of-Stake (PoS) chain following a community-approved vote in November. The decision marks a significant shift in the protocol’s operations, which had previously allowed users to stake Polygon’s MATIC tokens in exchange for liquid staking tokens called static. Per a blog post from the defi platform, the service discontinuation began on Monday. Lido notified users that they have until June 16, 2025, to withdraw their funds. After this deadline, withdrawals will only be available through explorer tools, the protocol stated. Additionally, from January 15 to January 22, 2025, Lido’s operations on Polygon will be temporarily paused, meaning users will be unable to withdraw their staked assets during this window. Lido’s community support and governance decision Lido’s decision to phase out its services on the Polygon PoS network follows extensive discussions and a community vote within the Lido DAO. In the blog post, Lido Finance’s team explained that the move was prompted by the overwhelming support from LDO token holders, with 99% of voters favoring the proposal. The vote considered two key proposals: one to discontinue the Polygon staking service and another to reevaluate the economic model of the protocol’s middleware. The Lido on Polygon sunset process has begun. https://t.co/icgidJsbqF See below for an overview of upcoming timelines and requirements 📆📜 — Lido (@LidoFinance) December 16, 2024 The team mentioned that several factors led to Lido’s decision to wind down its Polygon staking offering. The announcement cited limited user adoption, insufficient rewards, and the resource-intensive nature of maintaining the service as significant challenges. The announcement also highlighted the changing dynamics of the ecosystem, noting that the demand for liquid staking solutions on the Polygon PoS network had diminished. This decline in demand ultimately affected Lido’s ability to position itself as a foundational defi building block on the network. The blog post further pointed to the development of alternative liquid staking solutions within the Polygon ecosystem as a contributing factor to the decision. These alternative solutions, coupled with the smaller-than-expected growth of the Polygon PoS ecosystem, reduced the viability of Lido’s service on the chain. Focus shifting to Ethereum and defi trends The development team acknowledged that Lido’s focus has increasingly shifted toward Ethereum. The DAO recently approved a new initiative to launch a “community staking module” designed to make Ethereum solo staking more accessible. This initiative is part of a broader strategy to enhance the inclusivity of Ethereum’s staking ecosystem and better meet the demands of Lido’s user base. Lido’s exit from Polygon is not the first instance of the protocol retreating from a blockchain. In 2023, LDO’s DAO approved the discontinuation of its Solana staking service after the protocol experienced losses of $484,000, which significantly outweighed its $220,000 in revenue from the Solana network. The decision to exit Solana reflected similar challenges in user adoption and resource allocation, as well as the evolving dynamics of the blockchain and defi space. Aave, one of the largest lending protocols on Polygon, has also proposed ceasing operations on the network due to concerns over an upcoming review of the risk profile of bridged assets. On December 13, Aave founder Marc Zeller introduced the proposal, responding to Polygon’s governance request to use over $1 billion in stablecoin reserves to farm assets on other protocols. The proposal highlighted unease among defi projects about the evolving governance and risk factors within the Polygon ecosystem. At press time, LDO remains the largest liquid staking protocol for Ethereum, with approximately $39.7 billion in TVL, per DefiLlama data . The protocol continues to dominate the Ethereum liquid staking market ahead of the likes of Ether.fi and Rocketpool. A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.