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Sunsetting of Lido on Polkadot and Kusama

Author: Konstantin Zherebtsov
Chief Product Officer at MixBytes
As of August 1, 2023, the MixBytes team will no longer develop and technically support the Lido on Polkadot and Kusama liquid staking protocols. MixBytes is evaluating the possibility of supporting technically a dedicated DotSama native liquid staking solution.
  • Current state:
    Phase 3. Unbonding is enforced. Assets automatically unstaked from the relay chain.
stKSM was launched on the 18th of February 2022, and stDOT on the 31st of May 2022 on the Moonbeam network. There is a total value of ~$75K KSM staked (~1% of total KSMs staked in Kusama) by ~1.6K users, and ~$4M DOT staked (~0.6% of total DOTs staked in Polkadot) by ~11.5K users with Lido as of March 9th, 2023.

Both protocols are supported by a permissionless validator set and have been designed with a high performance dynamic reallocation mechanism based on node performance data, which you can learn more about in the Lido on Polkadot and Kusama Developer blog: https://mixbytes.io/blog/lido-on-polkadot-uncapped-second-stage

stKSM and stDOT have been integrated in DEX and aggregator dApps across DeFi. Lido on Polkadot ranks in the top 3 of DefiLlama's Moonbeam DeFi ecosystem: https://defillama.com/chain/Moonbeam.
The collaboration between the Lido DAO and MixBytes has been a long and productive journey, and MixBytes is incredibly grateful for the trust, participation and support that was received from users and ecosystem projects, including Moonbeam.

While we are proud of what we achieved, the decision to sunset Lido on Polkadot and Kusama was made through mutual agreement with the recognition of a few key challenges under current implementation that led to unmet financial expectations and include:

  1. Protocol Adoption: Data related to adoption and growth did not meet business case expectations to sustain investment.
  2. Current Market Conditions: Challenged macro economic factors and adjacent lack of liquidity in Polkadot's DeFi ecosystem undermined the value proposition of liquid staking.
  3. Limited capacity: The reliance on the Lido DAO for support caused occasional inefficiencies and bottlenecks to make progress at the required speed of execution.
  4. Balancing Ethereum priorities with Polkadot and Kusama: With the relative importance of Lido's infrastructure to Ethereum relative to other networks, the balance of priorities often leaned towards Ethereum first.

While the Lido DAO offers among the most robust and trusted liquid staking protocols across PoS networks, a dedicated focus on Polkadot and Kusama would have enabled the Lido on Polkadot and Kusama protocols to align better with its ecosystems.

Lido research posts for reference:

We intend to make the sunsetting process as straightforward and seamless as possible for the users and partners who have supported us.

While the termination of Lido on Polkadot and Kusama will be progressively carried out over time, users will be encouraged to withdraw and redeem their assets from the protocols as soon as they see fit.

Phase 1. 2023-03-15 — New staking deposits no longer accepted into Lido on Polkadot and Kusama protocols.
Phase 2. 2023-06-15 — Reward issuance and redemptions halted. Assets remain accessible via UI for protocol if previously unbonded.
Phase 3. 2023-06-22 — Unbonding is enforced. Assets automatically unstaked from the relay chain.
Phase 4. 2023-07-24 — Funds relocated to parachains, and can only be claimed via UI for protocol.
Phase 5. 2023-08-01 — Official termination. An alternative host for the UI will be arranged by the community.
dApp UI changes
Starting Phase 1, the protocol UI will only display and provide "Unstake" and "Unwrap" functionalities.
After Phases 2 and 3, only previously Unbounded assets will only be able to be claimed.
Following Phase 4, the only remaining option available via the protocol UI will be the 'Claim' function.
What's next
After announcing the sunsetting of Lido on Polkadot, we received an influx of interest from numerous networks and protocols with regret for such an outcome. Our supporters proposed to launch a new DotSama LST protocol operated by a newly formed DAO. MixBytes are excited and pleased with such support and is now considering passing its accumulated experience to that DAO to keep its creation alive!

As one of its pioneers, the MixBytes team continues to trust in the Polkadot network. We believe the Polkadot network is still at its early stages, and has a lot of potential to grow into. While we will no longer be technically supporting the Lido on Polkadot and Kusama protocols, we will remain a part of the journey by introducing a new DotSama liquid staking solution.

We are happy to get in touch with any teams in the ecosystem who have questions or are open to learning more and collaborating!
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