Lido activates Emergency Safety mode on a new record-setting day

On the evening of February 25, Lido announced that it had recorded a record inflow of money into the protocol within 1 day. At the same time, this liquid staking platform also announced the activation of Emergency Safe mode.

Lido activates Emergency Safety mode on a new record-setting day
Lido activates Emergency Safety mode on a new record-setting day

On its official Twitter, Lido announced a record 150,000 ETH staked into the protocol in just 1 day.

Notably, many on-chain data analysis units said that most of this ETH was staked from the wallet labeled Justin Sun โ€“ founder of Tron.

This move attracts the attention of the community, especially as the Ethereum network is approaching the Shanghai upgrade milestone (scheduled for March 2023). The fact that a large amount of ETH is staked into the protocol also led Lido to activate the โ€œStake Rate Limitโ€ โ€“ a feature that minimizes the impact of large capital flows into the platform.

Explaining how this safety feature works, Lido says it will reduce the amount of stETH being minted for a specific period of time (usually the 24-hour range). This limit will be gradually loosened after each block, corresponding to 6,200 ETH / hour.

The initial limit is 150,000 ETH and this parameter will be selected by the voting protocol in advance.

The 150,000 ETH limit is pre-set by the voting protocol by the voting protocol.
The 150,000 ETH limit is pre-set by the voting protocol by the voting protocol.

Then, when the user stakes ETH in Lido, the “free capacity” (corresponding to the remaining available limit) will decrease, and the “blocked-capacity” (corresponding to the amount of staked ETH) will increase. In the event of this normal operation, stETH will be minted 1:1 with the amount of ETH staked.

However, in an emergency when the amount of ETH exceeds the limit of 150,000 ETH (as mentioned at the beginning of the post), the protocol will apply a reducer, breaking the ETH into pieces and minting stETH at a low rate. than.

This amount of ETH will have to wait in Lido's Buffer contract.
This amount of ETH will have to wait in Lido’s Buffer contract.

And after waiting, this amount of ETH will be staked into Ethereum’s Beacon Chain network. This emergency safety mode will keep the network working properly, ensuring that the staking reward is not diluted, even if there is a sudden large position in the protocol.

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