Lido Finance and Optimism are launching a new incentive program to attract liquidity stakers to the layer 2 network.
as part of the initiative Lido OnLayer2 To improve the liquidity of Lido’s staked Ethereum (stETH) offering across all layer 2 solutions, the project received 1 million OP tokens from Optimism.
These tokens will provide additional OP rewards for users who stake ETH on Lido, transfer staked ETH to Optimism, and provide liquidity for selected token pairs. The program starts on February 15, 2023 and ends 6 months later.
OP is the governance token of Optimism, a layer 2 scaling solution that uses rollups to help scale the Ethereum network by moving operations off mainnet, pooling them, and then performing compressed data on mainnet.
Lido Finance is the largest liquidity staking platform in the market, allowing users to deposit various PoS tokens and earn rewards. Instead of needing 32 ETH (currently worth $49,000) to start investing in Ethereum, users can deposit any amount into Lido and start earning. The service is also available for Polygon, Solana, Polkadot, and Kusama.
How does the Optimism, Lido program work?
In exchange for ETH deposits, Lido users will receive stETH tokens, which can be used to earn or lend money elsewhere in DeFi.
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Through the new agreement with Optimism, users who choose to transfer stETH to the layer 2 network will now receive additional rewards in the form of Optimism’s native OP token.
It is important that users do not convert stETH to Optimism. Instead, wrapped stETH (wstETH) will be a usable asset given Lido’s expansion into various layer 2 networks. The asset is more compatible with cryptocurrency protocols and easier to integrate.
Jacob Blish, Lido’s Head of Business Development and Partnerships, said:
“The value of wstETH on Optimism is that it further democratizes access to liquidity staking for those who don’t want to or can’t afford to pay mainnet fees. By incentivizing wstETH’s massive liquidity on Optimism, continued acceptance and support for the security of the ecosystem make a contribution.”
So, users interested in earning those extra OP profits can switch to what Lido calls “preferred pairs,” which are wstETH-ETH and many other stablecoin pools.
For example, Lido pointed to Aave as a project that will benefit from the initiative. This means that users who deposit wstETH to the popular DeFi lending platform through Optimism can earn additional profits in OP tokens.
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