Lido, the industry leader in ether staking, will collaborate with two Cosmos blockchain ecosystem projects to connect its staked ether (stETH) tokens to the Cosmos network. This move might result in the exchange of millions of dollars’ worth of liquidity between the two blockchains.
According to data from DefiLlama, liquid staking has grown in popularity as a mechanism for investors to make returns on their digital assets. With a total worth of $16 billion, it is now one of the major decentralised finance (DeFi) sectors. Users can employ derivative tokens that can be used for lending and borrowing on platforms that support liquid staking, like Lido, to keep their locked-up tokens liquid.
The market value of Lido’s stETH is $13.8 billion, and it comes in two flavours: a rebasing token (stETH) and a wrapped, auto-compounding token (wstETH), which will serve as a bridge to Cosmos.
For the bridge project, Lido has chosen the cross-chain platform Neutron and the full-stack development network Axelar, CoinDesk discovered on Thursday. To increase liquidity for wrapped stETH and wstETH, Neutron and Axelar each pledged 1% of their respective token incentives.
Avril Dutheil, a key Neutron developer, wrote in a statement to CoinDesk, “We are excited to be part of the effort to bring one of the biggest liquid staking tokens, Lido’s staked ETH to the Cosmos ecosystem.” It demonstrates the importance of cross-chain support and our dedication to attracting users and liquidity to the Cosmos ecosystem.
The wstETH token can be utilised on a number of blockchains that are constructed on the Inter-Blockchain Communication (IBC) technology platform of Cosmos once it is on that platform. These include the popular DeFi protocols Osmosis and dYdX, as well as Cosmos, Cronos, Sommelier, and others.