Definition
Lido is a liquid staking protocol in decentralized finance (DeFi) that enables users to stake certain proof-of-stake assets while still retaining liquidity through derivative tokens. When assets are staked via Lido, the protocol issues a corresponding liquid token that represents the underlying staked position and its accumulated rewards. These liquid tokens are designed to be composable within the broader DeFi ecosystem, interacting with components such as a DEX, an AMM, or a Liquidity Pool. As a concept, Lido illustrates how staking can be integrated with DeFi primitives to keep capital productive rather than locked.
Context and Usage
Within DeFi, Lido is often referenced alongside other foundational protocols like Maker because it provides a core building block for on-chain financial activity. Its liquid staking tokens can be traded, used as collateral, or paired in a Liquidity Pool on a DEX that relies on an AMM, while the underlying assets remain staked. The concept of Lido highlights a shift from traditional Staking, where funds are typically illiquid, toward a model where staked positions are tokenized and integrated into DeFi markets. This positions Lido as a key example of how staking and liquidity can be combined in a single, interoperable design.