- MixBytes is ending support for Lido on the Polkadot protocol
- The overall termination of Lido on the network will be completed in August
Lido, which is currently one of the largest DeFI ecosystems in the crypto space, expanded its ecosystem to Polkadot in the second half of 2021. This expansion of Lido into the Polkadot ecosystem was led by a blockchain audit firm known as as mixbytes.
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However, MixBytes is now in the news after making an announcement, one stating that it will drop support for Lido on Polkadot and Kusama. Cited reasons for the discontinuation of service include: market conditions, protocol growth, limited capacity, and priority alignment.
How did it all start?
The proposal to launch Lido on the Polkadot network for the first time was introduced in August 2021. This proposal led to the creation of the staked versions of DOT and KSM, now known as stDOT and stKSM.
These assets have gained a lot of popularity over the past year. At the time of writing, there were 4,010,476 DOTs deployed through the Lido protocol, amounting to $22.6 million. Users who deployed their DOT through Lido will be most affected after the latter exits the Polkadot protocol.
What are the next steps?
Removing Lido from the Polkadot network will happen in stages.
As of March 15, new users will no longer be allowed to use their DOT through Lido. After June 15, rewards paid to current holders of stDOT and stKSM will be paused.
Unbonding will be enforced on June 22. Unbonding is a term used when a user’s staked assets are released so that they can be moved and sold on the crypto market. After this, all funds will be allocated to the parachain on July 24.
The official termination of the partnership between Lido and Polkadot will take place on August 1 after all the aforementioned phases have passed smoothly.
On the dot
The Polkadot network and its token – DOT – may register negative impacts as a result of these recent developments. In fact, DOT’s price has dropped noticeably over the past two weeks and the announcement of the Lido update could exacerbate this trend.
In addition, DOT’s volatility increased during this period, adding to the unpredictability of price movements.
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In conjunction with that, the total volume of the DOT token also fell in the charts.
Source: Sentiment
It remains to be seen how the Polkadot network manages to overcome these challenges in the coming months.