Liquidity staking protocol Lido Finance activated safety features to limit staking after more than 150,000 Ether was staked on the platform in a single day.
The decentralised finance (DeFi) protocol is popular amongst the crypto community as a tool to stake digital assets like Ether (ETH) without having to lock them away.
When Lido users deposit Ether, the tool issues a liquid version of their tokens back to them called staked Ether (stETH), rewarding users for each day they hold the liquid tokens in their wallets.
Lido tweeted on 25 February that hitting this staking milestone of 150,000 ETH activated a “dynamic mechanism” called the staking rate limit.
Explaining the feature, Lido said: “[The feature] is a mechanism to respond to large inflows of stake and address possible side-effects such as rewards dilution, without needing to pause stake deposits explicitly.”
“It works by decreasing how much total stETH can be minted at any one time based on recent deposits (sliding 24h window), and then replenishing this capacity on a block-by-block basis. Due to the rate of recovery, most users are unlikely to be affected.”
In a guide going further in-depth, Lido said that a safety valve feature would limit the amount of staked Ether that can be minted during high inflows.
“This means it is only possible to submit this much Ether to the Lido staking contracts within a 24-hour timeframe,” it said.
Lido added that the new staking rate limit mechanism would impact “all parties who may try to mint stETH, regardless of approach.“
On-chain analysis from Lookonchain noticed that the 150,100 ETH came from a single user, TRON founder Justin Sun, split between four deposits.
Lido Finance’s website says that more than $9 billion in ETH has been staked on the protocol since it launched.
Want to learn more about blockchain from industry leaders? Check out Blockchain Expo taking place in Amsterdam, California and London.
Explore other upcoming enterprise technology events and webinars powered by TechForge here.