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July 12, 2022by Laura Shin

Post-Merge, If Lido Becomes Dominant, What Does That Mean for Ethereum? – Ep. 372

Ryan Berckmans, Ethereum investor and community member, and Alexandre Bergeron, Bitcoin investor, discuss Lido’s dominance as a liquid staking provider, whether that issue can be resolved, and how it could be a centralizing force for Ethereum.

 

Show highlights:

  • what stETH is, what the uses cases are for stETH, and why it is important
  • how Lido had a first-mover advantage and how that kicked off network effects
  • whether the liquid staking derivatives system is one of a “winner-take-all”
  • how much of the staked ETH will be turned into a liquid staking derivative
  • how Lido might have a huge MEV opportunity after the Merge
  • what the proposer-builder separation is
  • whether Lido’s dominance will increase over time
  • whether other competitors have been competitive with Lido
  • why Lido is a natural monopoly because of the incentives and MEV opportunities
  • what the implication of Lido’s monopoly is for Ethereum’s censorship resistance
  • whether Lido is effectively a single entity despite having multiple node operators
  • whether there could be a long waiting period for becoming a validator after the Merge
  • how Lido is moving its staking derivatives to other chains
  • how Lido’s new dual-governance proposal works, why it might be useful to decentralize Lido and whether it reduces the power of LDO token holders
  • how Lido’s centralization is the biggest threat to Ethereum in the long term and what are the possible solutions
  • why Ryan believes the value of ETH comes from its credible neutrality and whether Lido’s centralization may jeopardize that
  • whether finding solutions around MEV opportunities is a good way to reduce Lido’s monopoly
  • whether Lido’s competitors could form an alliance and build a tokenized basket of their staking derivatives to compete with Lido
  • whether Lido could airdrop the LDO token to all ETH holders to decentralize its governance token

 

Thank you to our sponsors!

Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021

Ava Labs: https://www.avax.network/

Oasis: https://oasisprotocol.org/grant-programs?utm_source=unchained&utm_medium=partnership&utm_campaign=podcast-oasis-grants-program

Alex: 

  • Twitter: https://twitter.com/bergealex4

Ryan: 

  • Twitter: https://twitter.com/ryanberckmans

stETH

  • Lido’s explanation of what stETH is: https://twitter.com/LidoFinance/status/1535184472546889735?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
  • Previous Unchained Coverage: In the Recent Crypto Market Meltdown, What Role Did Lido’s stETH Play?: https://unchainedpodcast.com/in-the-recent-crypto-market-meltdown-what-role-did-lidos-steth-play-ep-370/

Lido’s Centralization:

  • Alex’s thread on why ETH is broken: https://twitter.com/bergealex4/status/1410761639226318852?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ
  • Ryan on a liquid staking monopoly: https://twitter.com/ryanberckmans/status/1521179049548300291?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ
  • Ryan’s proposed solutions: https://twitter.com/ryanberckmans/status/1531731955011579904?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ
  • Is Lido making Ethereum less decentralized?: https://cryptobriefing.com/is-lido-making-ethereum-less-decentralized/
  • LDO token analysis: https://medium.com/general_knowledge/lido-finance-liquid-ethereum-staking-ldo-potential-f5dc3553b8d2
  • Ethereum researcher Danny Ryan’s take: https://twitter.com/dannyryan/status/1524044527828303872?s=20&t=H4UNoLn7sKQyZx5ll3-Ncw
  • Ryan’s take on Lido’s self-limit: https://research.lido.fi/t/should-lido-on-ethereum-be-limited-to-some-fixed-of-stake/2225/9?u=ryanberckmans
  •  

Lido’s Governance Proposals

  • Lido + stETH dual governance: https://research.lido.fi/t/ldo-steth-dual-governance/2382
  • Hasu on Lido’s dual governance proposal: https://twitter.com/hasufl/status/1540652075352313857?s=20&t=sJU5C5xo5litEJrZZDaWNQ
  • Lido’s two-phase voting scheme: https://blog.lido.fi/moving-to-two-phase-voting/

MEV

  • Ryan on post-merge MEV: https://twitter.com/ryanberckmans/status/1453597003397611526?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ
  • Alex on proposer-builder separation: https://twitter.com/bergealex4/status/1540934540901744640?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ
  • Haseeb on post-merge MEV: https://twitter.com/hosseeb/status/1464003851942391834?s=20&t=JLyNokP7Kxj7tIiDzHIHTQ

Find Episode Transcript in Unchained Premium

Posted in: 2022, Shows, UnchainedTagged in: Alexandre Bergeron, Bitcoin investor, ETH Merge, Laura Shin, LIDO, Ryan Berckmans, staking, Unchained Podcast

Our guests on this episode:
Ryan Berckmans, Ethereum investor and community member

Ryan Berckmans

Ethereum investor and community member

Alexandre Bergeron, Bitcoin investor

Alexandre Bergeron

Bitcoin investor

© Copyright 2022 – 2023 Laura Shin Media LLC. All Rights Reserved.

Website by Zach Swinehart.

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