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Lido closure on Solana “deemed necessary” because to low payments, according to staking business

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The decision to sunset Lido on Solana stems from unsustainable financials and meager fees generated by the protocol. Lido Finance, a decentralized liquid staking protocol, recently declared its intention to cease operations on the Solana blockchain. This decision materialized following a community vote within Lido’s decentralized autonomous organization.

The proposal to sunset Lido on Solana initially surfaced from Lido’s peer-to-peer (P2P) team on Sept. 5. They pointed to unsustainable financials and the insufficient fees generated by Lido on Solana as the primary reasons. Voting commenced on Sept. 29 and concluded a week later on Oct. 6.

In an Oct. 16 post, Lido elucidated, “After extensive DAO forum discussions and a community vote, the approval for sunsetting the Lido on Solana protocol was granted by Lido token holders, and the process is set to commence shortly.”

Effective Oct. 16, Lido ceased accepting staking requests. Voluntary node operator off-boarding is scheduled to commence on Nov. 17, and Lido users are required to unstake on Solana’s frontend by Feb. 4.

“Post this date, unstaking must be carried out using the CLI,” added Lido.

In the earlier proposal, Lido sought $20,000 per month from Lido DAO to support technical maintenance efforts related to sunsetting operations on Solana over the next five months. Lido’s P2P team, which took charge of Lido’s Solana project in March 2022 from Chorus One, invested around $700,000 into Lido on Solana. However, they only generated $220,000 in revenue, resulting in a net loss of $484,000, as per the proposal authored by Mediakov.

The alternative proposed on Sept. 5 was to allocate more funding to Solana from Lido DAO. However, 92.7% of the 70.1 million LDO tokens, as voted by tokenholders, favored sunsetting operations on Solana, according to the open-source voting platform Snapshot.

Lido acknowledged that the decision was tough but necessary, stating, “While challenging, this choice was deemed necessary for the continued success of the broader Lido protocol ecosystem, despite our strong relationships across the Solana ecosystem.”

Lido confirmed that staked Solana (stSOL) tokenholders will continue receiving network rewards throughout the sunsetting process.

Currently, Lido’s staking services find support solely on Ethereum and Polygon, where $14 billion and $80 million are staked, respectively, as per Lido’s website.

Having launched on Solana on Sept. 8, 2021, when Solana’s SOL was priced at $189 (an 87% drop from its current price of $24, according to CoinGecko), Lido is making a strategic exit. Despite this development, SOL is showing resilience, with an 8.6% increase in the last 24 hours.

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