What is Lido DAO (LDO)?

Ethereum staking has two barriers: 32 ETH to run a validator, and the fact that staked ETH is locked and useless while it earns. Lido removes both. Deposit any amount, receive stETH, and Lido's node operators run the validators. Your stETH accrues the staking yield and remains a liquid ERC-20 you can lend, use as collateral or sell.

That combination — yield plus liquidity — is why liquid staking became the largest category in DeFi and why Lido became the largest protocol in it. It solved a real problem cleanly and it arrived first.

stETH and wstETH

stETH rebases: your balance increases as rewards accrue, so one stETH stays roughly one ETH. That is intuitive for a holder and awkward for smart contracts, which generally assume balances do not change on their own. wstETH is the wrapped version — the balance stays fixed and the value per token rises instead. Most DeFi integrations use wstETH, and confusing the two is a common and expensive mistake.

Dual Governance, and what it is actually for

The structural criticism of Lido has always been that LDO holders govern a protocol whose risk is borne by stETH holders. An LDO vote could change the node operator set, the fee, or the risk parameters — and the people whose ETH is at stake had no say at all. Since LDO is a small fraction of the value stETH represents, the incentives were plainly misaligned.

Dual Governance, formally approved by the DAO, gives stETH holders a mechanism to delay or resist contentious LDO decisions — an exit ramp and a brake rather than a vote. It is a genuine attempt to fix the alignment problem rather than argue it away, and it is the main reason institutional allocators treat Lido differently than they did.

• Governance over Lido: the node operator set, the fee, risk parameters and treasury spending.
• A claim on the DAO's share of staking fees, in the same indirect sense as other governance tokens.
• Incentive programmes and liquidity mining funded by the treasury.

Be clear on the distinction that catches people out: LDO is not stETH. stETH is the staked ETH position and earns the staking yield. LDO is a governance token for the organisation that runs the protocol, and it earns nothing directly. Someone buying LDO to get Ethereum staking exposure has bought the wrong asset.

The value case for LDO is a share of a large and growing fee stream, mediated by governance. Lido takes a percentage of the rewards it generates, split between node operators and the DAO. On a position of this size that is real revenue — and whether it reaches holders is the same open question every DeFi governance token faces, and one Lido has answered less directly than Aave or Uniswap have.

1 billion LDO, allocated at launch to the DAO treasury, early investors and the founding team on vesting schedules that have long since run. There is no ongoing issuance.

A large share sits in the treasury, spent by governance on incentives, grants and operations. That is the main supply consideration — not a schedule, but a DAO deciding how fast to spend.

The revenue, and where it goes

Lido takes a fee on the staking rewards it produces, split between the node operators who run the validators and the DAO treasury. Against roughly 27% of all staked ETH that is a substantial and recurring stream.

Unlike Aave's automatic buyback or Uniswap's fee burn, Lido has not converted that revenue into a direct mechanism for LDO holders. The treasury accumulates and governance spends. In a year when comparable protocols moved decisively toward returning value to tokens, that is a visible gap rather than a neutral choice.

LDO itself is not staked for yield — it is a governance token with no protocol staking mechanism.

What people mean by "staking with Lido" is depositing ETH to receive stETH, which earns Ethereum's staking yield minus Lido's fee. At Ethereum's current native rate near 2.8%, the stETH yield lands modestly below that.

The risks specific to liquid staking

• stETH can trade below ETH. It did in 2022, sharply, when leveraged positions unwound. The peg is arbitrage-driven, not guaranteed, and it breaks exactly when you would want to sell.
• Smart contract risk in Lido's own contracts, which hold an enormous amount of value.
• Node operator risk: Lido's validators are run by a curated set, and their mistakes — slashing, downtime — reach stETH holders.
• Withdrawal queue: exiting to ETH goes through Ethereum's own exit queue, which lengthens under stress.

Lido's size is a risk to Ethereum, and Ethereum's response is a risk to Lido

Around 27% of staked ETH under one protocol is uncomfortably close to thresholds where a single entity's behaviour affects Ethereum's finality guarantees. The Ethereum community has debated this for years, including proposals to penalise concentration at the protocol level. Lido has resisted self-limiting. Any protocol-level response would land directly on Lido's business.

The stETH peg is the practical risk

stETH is redeemable for ETH through the withdrawal queue, which anchors it — but in a fast unwind the market price can fall below one ETH, as it did in 2022. Anyone holding leveraged stETH positions is exposed to a discount that appears precisely during the conditions that cause it.

Node operator concentration

Lido's validators are run by a curated set of professional operators rather than by anyone who wants to join. That produces reliability and it means a small group operates a very large share of Ethereum's validator set — a centralisation within a centralisation.

Competition, including from the exchanges

Rocket Pool is more decentralised, Coinbase's cbETH has distribution, and ETH staking ETFs launched in 2025 and 2026 now offer the yield inside a brokerage account with no protocol risk at all. Lido's share has been defended rather than grown.

LDO has no direct claim on the revenue

Fees accrue to the treasury and to node operators. Governance decides what happens next. In 2026, with Aave running immutable buybacks and Uniswap burning fees, a governance token with no mechanism is a weaker proposition than it was two years ago.