Lido, a well-known liquid staking protocol with a TVL of 39.3 billion dollars, has just announced the sunset of its operations on Polygon.
The community of the project has voted for a gradual elimination of the chain, which will see the exit from the cryptographic service on June 16, 2025.
Users have until that day to withdraw funds on Lido deposited via Polygon Pos. The focus of operations will now shift to Ethereum and its L2.
All the details below.
Lido announces service interruption for the Polygon network
Lido, the leading protocol in the liquid staking sector, has initiated the gradual phase-out of its staking services for the Polygon PoS network.
The tough decision came after the DAO community gathered and voted in favor of stopping operations for the chain in question.
After its initial implementation on Lido in 2021, under the proposal by Shard Labs that had introduced liquid staking of MATIC tokens, the era of sunset arrives.
The protocol interrupted the Polygon staking service already yesterday and notified users of the definitive interruption on June 16, 2025.
As stated in the official announcement, after this date users will only be able to withdraw from Lido using the appropriate explorer tools.
https://twitter.com/LidoFinance/status/1868668099345666540
As mentioned, since December 16, staking on the Polygon network via Lido has been suspended, with the user interface no longer accepting new requests.
From here, a transition period of about 6 months will follow during which users will need to take steps to withdraw their funds through the dApp interface.
Between January 15 and 22, 2025, the protocol will undergo a temporary suspension of services, during which withdrawals cannot be processed.
Finally, on June 16, 2025, front-end support will end, and withdrawals will only be possible through browser tools (directly from the contract).
The Lido team recommends completing the unstake of stMATIC before the established date to facilitate the user experience.
We remind you that for the unstake of the resource, an unlock time of about 9 days is expected.
https://twitter.com/LidoFinance/status/1868668104818975056
The reasons for Lido’s abandonment
The decision to cease its operations on the Polygon PoS blockchain came after extensive discussions by the Lido community through the DAO forum.
According to the participants of the protocol governance, user adoption for Lido services on Polygon has been lower than expected.
Furthermore, the rewards generated were lower than the expenses for maintaining the support and did not justify its continuation.
It is also worth highlighting the lack of scalability of the chain, which has led Lido to reassess its multichain trajectory.
Now the largest DeFi application for TVL will focus more on Ethereum and its associated networks such as layer-2 and rollups.
This is what was stated verbatim by the Lido community, which cites a combination of factors in the decision to end support for Polygon:
“Lido on Polygon has faced significant challenges in achieving the expected impact,” reads the announcement on Monday. “Several factors have contributed to this situation: limited user adoption, insufficient rewards, high-resource-intensive maintenance requirements, and evolving ecosystem dynamics.”
Polygon Pos currently represents the 5th network for capital locked on Lido, behind BNB Chain, Base, Arbitrum, and Ethereum.
The increase in holdings in wstETH on Polygon, which has doubled its TVL in the last year, was not sufficient to ensure the continuation of the service.
The chain has not been able to keep up with the strong growth of blockchain competitors like Mantle, Linea, Scroll, Op Mainnet, ZKsync, and others.
We remember that last year, Lido had abandoned the blockchain of Solana for similar reasons, given that the losses of 484,000 dollars exceed its revenues at 220,000 dollars
At the feet of a potentially disruptive Polygon community proposal: Aave steps forward and threatens to exit
The sunset on Lido comes at a delicate moment for Polygon, while the market lender Aave has received a proposal to also withdraw its services from the chain.
A group of collaborators on Aave, which also represents the dApps on Polygon with the most TVL, has cited strong concerns about a DAO proposal that aims to use the bridged stablecoins of the chain for yield generation.
A few days ago, in fact, some members of the Polygon DAO had presented the idea of aggressively leveraging the unproductive liquidity of the chain.
This move, which includes the participation of the Yearn, Morpho, and Allez protocols, could generate an annual yield of 70 million dollars.
Although this is a strong incentive for the Polygon ecosystem and its users, it is undeniable that the use of the bridge reserves can lead to serious security gaps.
Using 1.3 billion dollars in collateral stablecoin, there is a risk of jeopardizing not only the funds of the Polygon community, but those of the entire DeFi landscape.
In fact, in this way Polygon would increase its dependence on third parties, introducing a systemic risk of exploit.
Aave, sensing the potentially destructive effects of the proposal, has taken precautions by stating that it will leave Polygon if it is actually implemented.
For the moment we only have a Pre-PIP, which aims to gather feedback in preparation for a true “Polygon Improvement Proposal.”
It is very likely that this strategy will not be taken seriously by the group, considering the capital flight it would generate.
User X “Blackie” highlighted how this proposal is “irresponsible and dangerous”.
https://twitter.com/ManInBlackie/status/1868661522362417633
