The Ethereum staking-as-a-service company Lido is aiming to go fully decentralized. The project has implemented a skeleton upgradable smart contract for making new withdrawals and new deposits fully non-custodial. The project is still seeking an optimal solution to become a trustless node operator.
Lido offers users the ability to stake ETH, which will be utilized once Ethereum transitions to proof-of-stake, without sacrificing liquidity. ETH gets locked up in the protocol, and Lido gives users in return a derivative (stETH) representing their locked stake. In a blog post outlining next steps, the Lido team identified three points where users currently still need to trust the company. These include deposits, withdrawals and becoming a node operator, which it is seeking to now change to become trustless.
An Alternative to Centralization
Centralized exchanges offer a significant portion of the ETH2 staking services today. Because of the amount of ETH they stake for their customers, they’re likely to also be the biggest block producers once ETH2 goes live.
Lido believes that could “harm Ethereum’s decentralization.”
“For that reason, we believe decentralized staking pools like Lido are required to provide a competitive alternative to centralized exchange staking,” Lido said in the blog post.