Lido begins phasing out staking service for Polygon PoS chain

Lido, the leading liquid staking protocol by total value locked, initiated the phase-out of its staking services for the Polygon PoS chain following a community-approved vote in November.

Its implementation on the Polygon PoS network allowed users to stake Polygon's MATIC tokens for liquid staking tokens called static. 

The protocol discontinued the Polygon staking service on Monday and notified users that they could withdraw funds until June 16, 2025. After this date, withdrawals will be available through explorer tools, the announcement said .

The announcement said that a combination of various factors led Lido to reevaluate and eventually initiate the sunsetting of Lido on Polygon. 

“Lido on Polygon has faced significant challenges in achieving its intended impact,” the Monday announcement said. “Several factors have contributed to this situation: limited user adoption, insufficient rewards, resource-intensive maintenance requirements, and evolving ecosystem dynamics.”

Furthermore, Lido said it had observed LDO token holders’ shift of focus to Ethereum. Earlier this year, Lido DAO approved an initiative to launch its “community staking module,” designed to make Ethereum solo staking more inclusive.

Last year, Lido DAO voted to discontinue its Solana staking service for similar reasons, as losses of $484,000 outweighed its revenue of $220,000.

Lido is the largest liquid staking protocol for ETH and currently ranks as the top DeFi protocol by total value locked, with around $39.3 billion in TVL at the time of writing.

Lido's sunset on Polygon takes place as Aave, the largest dApp on Polygon by TVL, received a proposal  from a contributor group to withdraw its lending services from Polygon’s PoS chain in response to a Polygon proposal aiming to use bridged stablecoins for yield generation.