Liquid staking protocol Lido Finance pressed the massive red button to activate the protocol’s security feature called “Stake Limit” after greater than 150,000 ethers were staked on the protocol in at some point.
Lido is a seamless digital asset staking solution, on this case allowing users to bet on Ether (ETH) without having to lock tokens. When a user deposits Ether, Lido issues them a liquid type of ETH referred to as Stacked ETH (stETH), giving users staking rewards for every day they hold the tokens of their wallets.
The Lido protocol has registered the biggest each day inflow of stakes thus far with over 150,000 ETH staked.
Once this number was reached, an interesting (but necessary) protocol security feature called Staking Rate Limit was activated.
Here’s how it really works pic.twitter.com/ngBtWz7q18
— Lido (@LidoFinance) February 25, 2023
According to the February 25 tweet of the Liquid Staking Protocol, the “dynamic mechanism” was activated upon reaching the each day staking limit of 150,000 Ether.
IN related guide, Lido explained that the “safety valve” is meant to limit the quantity of staking ether (stETH) that will be minted during times of high influx, which is to deal with possible bad uncomfortable side effects corresponding to prize dilution.
“This implies that it is feasible to transfer that much ether into Lido staking contracts in 24 hours,” he explained.
The mechanic works by limiting the quantity that will be minted based on deposits within the last 24 hours, replenishing capability at a rate of 6,200 Ethereum (ETH) per hour.
“It works by reducing the full amount of stETH that will be minted at anyone time based on recent deposits, after which replenishing that capability block by block,” said Lido.
Lido noted that the Staking Rate Limit mechanism would affect “all parties that may attempt to mint stETH, no matter approach.”
Lookonchain, an eagle-eyed web analyst, shared a file screenshot reportedly showing that 150,100 ETH could come from a single user, with three deposits of fifty,000 each and one in all 100.
According to on the Lido Finance website, as of February 27, greater than $8.9 billion ETH was staked within the protocol, a major increase from the $5.8 billion reported on January 2.
Related: SEC Cryptocurrency Crash Has Uncertain Consequences for DeFi: Lido Finance
Lido’s latest development comes as Ether staking volume reportedly continues to grow because the Shanghai update approaches. The Ethereum Shanghai update or “Ethereum Shanghai fork” is due out in mid-March, resulting in speculation about what could occur to the ETH price.
One of the five planned updates, EIP-4895, is anticipated to unlock staked ETH and enable withdrawals, potentially resulting in more liquidity within the crypto market.
Since the launch of Beacon Chain and the introduction of ETH staking in December 2020, $25 billion value of ETH has been staked.
