Liquid staking protocol Lido Finance has pushed the massive purple button with a view to activate a protocol security function known as “Staking Rate Limit” after more than 150,000 Ether was staked with the protocol in a single day.
Lido is a liquid staking resolution for digital property, on this case permitting customers to stake Ether (ETH) with out them needing to have their tokens locked. When a person deposits Ether, Lido points them a liquid variant of ETH, often known as staked ETH (stETH), giving customers staking rewards for every day the tokens are held of their wallets.
Lido protocol has registered its largest day by day stake influx up to now with over 150,000 ETH staked.
Upon reaching this quantity, a curious (however essential) protocol security function known as Staking Rate Limit was activated.
Here’s the way it works pic.twitter.com/ngBtWz7q18
— Lido (@LidoFinance) February 25, 2023
According to the liquid staking protocol’s Feb. 25 tweet, the “dynamic mechanism” was activated after the daily staking limit of 150,000 Ether was reached.
In a related guide, Lido explained that the “safety valve” is aimed at limiting the amount of staked ether (stETH) that can be minted during times of high inflows, which is intended to address the possible ill side effects, such as rewards dilution.
“This means it is only possible to submit this much ether to the Lido staking contracts within a 24-hour timeframe,” it explained.
The mechanic works by limiting the amount that can be minted based on deposits within the last 24 hours, replenishing capacity at the rate of 6,200 Ethereum (ETH) per hour.
“It works by reducing how a lot complete stETH will be minted at anybody time based mostly on latest deposits, after which replenishing this capability on a block-by-block foundation,” Lido said.
Lido noted the Staking Rate Limit mechanism would affect “all events who might attempt to mint stETH, no matter method.”
Eagle eyed on-chain analyst Lookonchain shared a screenshot reportedly showing that the 150,100 ETH may have come from a single user, with three deposits 50,000 each, and one of 100.
According to Lido Finance’s website, as of Feb. 27, more than $8.9 billion ETH has been staked with the protocol, up significantly from the $5.8 billion reported on Jan. 2.
Related: SEC’s crypto staking crackdown has uncertain consequences for DeFi: Lido Finance
The latest development from Lido comes as Ether staking volumes have reportedly continued to rise as the Shanghai upgrade nears. The Ethereum Shanghai upgrade or the “Ethereum Shanghai fork,” is due in mid-March, leading to speculation about what could happen to the ETH price.
One of the five planned upgrades, EIP-4895, is expected to unlock staked ETH and allow withdrawals, potentially leading to increased liquidity in the crypto market.
$25 billion of ETH has been staked since the Beacon Chain was launched and introduced staking to ETH in December, 2020.