Lido Finance has announced the suspension of staking services on the Polygon network, a decision made after extensive discussions within the community and a vote by Lido DAO members, with 99% supporting this proposal.

This decision is the result of a request from Lido DAO Token (LDO) holders and reflects a shift in market demand and conditions. Specifically, the Lido team considered two proposals in the vote in November, one to withdraw from Polygon and another proposal to 'reassess the economics of the intermediary software.'

According to the research team, Lido faces significant challenges on the Polygon network, including high maintenance costs, insufficient rewards, and changes in the decentralized finance (DeFi) landscape. Specifically, the shift to zkEVM solutions has reduced demand for liquidity staking on the Polygon POS platform, impacting Lido's potential in this ecosystem.

This change has led to a decrease in demand for liquidity staking solutions on Polygon POS, reducing Lido's potential as a DeFi building platform.

They also stated that alternative liquidity staking solutions have been built in a smaller ecosystem than initially expected.

During the discussion phase, Shard Labs, the unit that proposed staking services on Polygon in 2021, noted that the shift of DeFi to zkEVM has diminished the significance of Polygon's proof-of-stake (PoS), as well as the role of liquidity staking as an essential component of other protocols.

As of December 16, staking requests on Polygon have stopped, however, users can still withdraw staked MATIC through Lido's interface on Polygon until June 16, 2025. Staking rewards have also been suspended. Additionally, Lido will suspend all withdrawal activities from January 15 to January 22, 2025.

By June 16, 2025, Lido will cease support for the interface on Polygon, and withdrawals will only be processed through browser tools.

Lido Finance is currently the largest liquidity staking protocol in the DeFi market with a TVL of up to $38 billion. Data from Dune shows that Lido has $41 million worth of tokens staked on Polygon. The Polygon network currently has a TVL of over $1.2 billion.

Source: Dune

Lido previously announced its withdrawal from the Solana blockchain last year, after the community voted and the company expressed concerns about unsustainable financial conditions and low fees on this platform.

Moreover, Aave, one of the prominent lending protocols on Polygon, has also proposed to cease operations on this network due to concerns about risk assessment for bridged assets on Polygon, responding to Polygon's governance request regarding the use of over $1 billion in stablecoin reserves to leverage on other protocols.



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