Liquid staking protocol Lido Finance has pushed the big red button to activate the safety feature of the protocol called “Staking Rate Limit” after more than 150,000 Ether has been staked with the protocol in one day.
Lido is a liquid staking solution for digital assets, in this case it allows users to stake Ether (ETH) without having to lock the token. When users deposit Ether, Lido issues a Liquid variant of ETH, known as staked ETH (stETH), giving the staking user a reward for each day the token is held in the wallet.
Lido Protocol has registered the biggest daily inflow of shares with more than 150,000 ETH.
Once that number is reached, a curious (but important) protocol safety feature called Staking Rate Limit is activated.
Here’s how it works pic.twitter.com/ngBtWz7q18
– Lido (@LidoFinance) February 25, 2023
According to the liquid staking protocol’s tweet on February 25, a “dynamic mechanism” is activated after the daily staking limit of 150,000 Ether is reached.
In a related guide, Lido explains that the “safety valve” is intended to limit the amount of staked ether (stETH) that can be printed during high inflows, which is intended to overcome possible side effects, such as reward dilution. .
“This means that it is only possible to send this ether to the Lido staking contract within a 24-hour period,” he explained.
The mechanic works by limiting the amount that can be printed based on deposits in the last 24 hours, filling the capacity at a rate of 6,200 Ethereum (ETH) per hour.
“It works by reducing the total amount of stETH that can be printed at any one time based on new deposits, then refilling that capacity on a block-by-block basis,” Lido said.
Lido notes that the Staking Rate Limit mechanism will affect “all parties who can try to mint stETH, regardless of their approach.”
Eagle eyed on-chain analyst Lookonchain shows a picture It is reported that 150,100 ETH may come from one user, with three deposits of 50,000 each, and one of 100.
According to the Lido Finance website, as of February 27, more than $8.9 billion of ETH has been staked with the protocol, significantly up from the $5.8 billion reported on January 2.
related: SEC crypto staking crackdown has uncertain consequences for DeFi: Lido Finance
The latest development from Lido comes as Ether staking volumes reportedly continue to rise as the Shanghai upgrade nears. The rise of Ethereum Shanghai or the “Ethereum Shanghai fork,” due in mid-March, led to speculation about what could happen to the price of ETH.
One of the five planned upgrades, EIP-4895, is expected to unlock staked ETH and allow withdrawals, which could cause liquidity in the crypto market.
$25 billion of ETH has been purchased since Beacon Chain launched and introduced staking to ETH in December 2020.