by • Lido Finance, a liquid staking protocol, has implemented a safety measure to control the staking rate following a record high of 150,000 ETH staked in one day.
• This safety feature called Staking Rate Limit is designed to mitigate potential side effects such as reward dilution caused by high inflows.
• The protocol limits the amount of staked ETH that users can mint based on their 24-hour deposit and replenishes at 6200 ETH per hour.
Lido Finance Introduces Staking Rate Limit
Lido Finance, a liquid staking protocol, has employed a safety measure to control the staking rate after recording over 150,000 ETH staked in one day. The protocol announced this development via Twitter.
Objective of Staking Rate Limit
As per the announcement, Lido was concerned about the safety of its platform and intends to prevent such a massive inflow from continuing. Therefore, it decided to activate a safety feature called Staking Rate Limit to check the number of stakes and mitigate possible side effects.
Working Mechanism Of Safety Feature
Lido Finance is a crypto liquid staking platform that allows users to stake Ethereum without locking their tokens. The protocol issues a liquid variant of ETH called staked ETH (stETH) to users who stake their Ethereum. This enables users to earn daily staking rewards while holding their tokens in Lido wallets.
The safety valve limits the amount of staked ETH users can mint based on their 24-hour deposit, keeping the refill capacity at 6200 ETH per hour. Therefore, the amount of stake ETH users can mint at any time is reduced based on recent deposits.
Safety Feature Prevents Reward Dilution
Lido explained that activating this measure would prevent potential issues like reward dilution that might arise from high inflows.
Conclusion
By introducing this safety feature, Lido Finance aims to protect its platform from unforeseen events caused by huge inflows and maintain user rewards without causing any issues like reward dilution.
