Since Ethereum’s announced plans of switching over to Proof-Of-Stake some time during 2022 (estimates at Q3/Q4), entrepreneurial minds have been scrambling to capitalize on the rising demand for liquid staking among ETH holders.
The gap continues to close as Lido, the market leader for Ethereum liquid staking, announced recently that it received a USD $70M investment from Sillicon Valley VC giant Andreessen Horowitz.
On top of this, Andreessen Horowitz also staked an undisclosed portion of their ETH holdings on the Ethereum Beacon Chain, using Lido’s services.
Representing over 80% of the market share in the Ethereum liquid staking space, Lido owns assets worth well over USD $10B across 76,000 individual crypto wallets, according to recent reports.
With this USD $70M investment from Andreessen (also known as “a16z”), Lido looks to further support the adoption of decentralized staking solutions for Ethereum.
What is Lido?
Lido Finance is a liquid staking provider that aims to make staking an accessible asset class for all – whether you’re an experienced crypto junkie or an absolute beginner.
With Lido, staking ETH and other PoS assets without sacrificing decentralization nor becoming illiquid is a real possiblity.
Without lock-up periods or minimum deposits, Lido essentially removes the accessibility issues of ETH staking. Lido achieves this through the use of their staking derivative token, stETH. Lido users are provided liquidity that would have otherwise not been available through other platforms.
The rewards for stETH are then accrued automatically, meaning that Lido users can earn staking yields and maintain their network share through this derivative token while continuing to use it as collateral in other DeFi protocols.
It’s a win-win situation: you continue to stake ETH through stETH while enjoying the liquidity privileges of actually holding ETH.
Why Is Andreessen Horowitz Investing In Lido?
There are two trains of logic behind this investment:
- The platform’s large community
- The lead that Lido has over its competitors in terms of market share
In a16z’s announcement on the investment, the group highlights the platform’s community, noting that their unwavering commitment to decentralization and early adoption are the cornerstone values that they will need to eventually create a fully-trustless staking pool while also embracing alternative solutions.
At the time of this writing, Lido’s main competitor is Rocket Pool. Lido currently has a TVL of $14.05B while Rocket Pool remains at a TVL of $475.32M. This monumental lead positions Lido as obvious market leaders in the foreseeable future, and prime candidates for investment.