On March 3, venture capital giant Andreessen Horowitz announced its latest major crypto investment. The company injected $ 70 million into the platform staking Lido for Ethereum.
Lido offers services of staking, simplifying the process for cryptocurrency retail investors. The staking independently implies a lot of technical knowledge in setting up hardware and software. There is also a minimum bet of 32ETH (approximately $ 87.500 a quotation current) to become a network validator on the ETH 2.0 chain.
Furthermore, the ETH stakes must be held for at least a year until the two Ethereum chains merge later in 2022.
Lido allows investors to wager small amounts without the hassle of managing their own software and hardware. It takes a cut of the rewards staking in exchange for the services provided. Several major cryptocurrency exchanges, such as Binance and Kraken, also offer staking similar.
Economy Staking growing
Ethereum is currently still running on a proof-of-work blockchain which involves energy-intensive mining. However, this year it will move to a greener proof-of-stake consensus mechanism.
Lo Staking of Ethereum takes place as early as December 2020, when the Beacon Chain was launched. According to the network explorer, there were 9,7 million ETH staked, worth about $ 26,5 billion at the time of writing.
A16z explained that Lido provides a way to earn extra returns beyond the current 4,9% APY. It issues a token called STETH which represents locked ETH which can be used on other decentralized financial platforms.
"By issuing a native Ethereum liquid token, Lido allows you to use ETH locked up as collateral within DeFi in the same way you can use ETH currently."
Invest your own Ethereum
The firm added that it has also staked a portion of a16z's Ethereum holdings on the Beacon chain in addition to its investment.
According to TechCrunch, there is currently approximately $ 10 billion worth of Ethereum staked with Lido, which gives it an 80% market share of the ecosystem of staking. The assets are split into 76.000 individual cryptocurrency wallets, according to Lido co-founder Konstantin Lomashuk.
In addition to Ethereum, Lido also supports it staking liquid for the Solana (SOL), Kusama (KSM) and Terra (LUNA) blockchains and plans to launch on Polygon (MATIC) later this month.
