Lido Finance adds a security feature after a large inflow of participation

Lido Finance, a net betting protocol, employed a security measure to control the betting rate after registering more than 150,000 ETH wagered in one day. the protocol announced this development via Twitter.

According to the announcement, Lido was concerned about the security of its platform and intends to prevent such a large flow from continuing. Therefore, he decided to activate a security feature called Staking Rate Limit to verify the number of stakes and mitigate possible side effects.

Lido Finance introduces participation rate cap to deal with potential high-inflow side effects

Lido Finance is a cryptographic liquid betting platform that allows users to bet Ethereum without locking their tokens. The protocol issues a liquid variant of ETH called Staked ETH (stETH) to users who stake their Ethereum. This allows users to earn daily rewards while keeping their tokens in Lido wallets.

Lido has been providing this service since December 2020, a few weeks after the Ethereum 2.0 Beacon Chain was launched. However, as per the recent announcement, the platform never anticipated the amount of ETH staked on a single day that occurred last week. As such, Lido has been increasingly concerned about the safety of its platform, should such an occurrence be repeated.

On a state guide, Lido explained the mechanism by which the security feature works, including the purpose of triggering it. According to Lido, the security feature will limit the amount of staked Ethereum (stETH) that users can mint during high inflows. This measure would avoid potential problems, such as reward dilution, that could arise from high entries.

The safety valve limits the amount of staked ETH users can mint based on their 24-hour deposit, keeping the recharge capacity at 6,200 ETH per hour. Therefore, the amount of stake ETH users can mint at a time is reduced based on recent deposits. Lido Finance noted that resupply capacity will now be block by block.

This means that users can only send a limited amount of Ether to Lido staking Smart Contracts in a 24-hour period. Furthermore, the company noted that the Staking Rate Limit would apply to all users intending to mint stETH, despite its approach.

Ethereum Witnesses Increase in ETH Participation Volume Ahead of Shanghai Update

Meanwhile, on-chain analytics firm Lookonchain made a notable observation. lookonchain shared a screenshot showing that the 150,100 ETH wagered in a single day could have come from a single user.

According to the screenshot, the user made three consecutive deposits of 50,000 ETH each and another of 100 Ether, totaling 150,100 ETH.

Information about Lido Finance’s website shows that the protocol now has over $9 billion in staked Ether tokens. This represents a significant increase from the $5.9 billion reported on Jan. 2, when Lido Finance overtook MakerDAO and AAVE, whose betting volume was $5.89 billion and $3.7 billion, respectively.

Lido Finance’s move comes as Ethereum reports an increase in betting volume amid increased anticipation for the next Shapella update. The Shanghai/Capella update, which would see the release of staked ETH blocked on the Beacon Chain, would live in march.

Ethereum will claim the $1,700 mark soon l ETHUSDT on

Given user speculation about a possible rise in the price of Ether after the update, people may be rushing to stake their tokens in preparation for the launch. This is the most likely reason behind the sudden increase in Ether volumes staked in staking protocols.

Ethereum developers claim that one of the improvement proposals, EIP-4895, which would follow Shapella, would unlock staked ETH. This would allow users to withdraw their Staked Ether and earn and accumulate rewards, which can cause increased liquidity in the cryptocurrency market.

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