Photo credit: Lido Finance

Lido Finance has announced that its liquid staking protocol on Polygon will be effectively discontinued in the coming months, following an extensive governance vote by LDO token holders. The decision marks a strategic refocus on Ethereum while winding down operations on Polygon due to challenges in adoption and shifting ecosystem dynamics.‍

Reasons Behind the Sunset

Lido on Polygon was introduced in 2021 through a proposal by Shard Labs, aiming to provide liquid staking solutions for Polygon’s Proof-of-Stake (PoS) network. Despite initial optimism, the protocol has faced obstacles including limited user adoption, insufficient staking rewards, and the high costs associated with maintaining the service.

In a blog post, Lido cited a declining demand for liquid staking on Polygon, exacerbated by the rise of zkEVM solutions and shifting DeFi priorities. These changes have diminished the role of liquid staking within the Polygon ecosystem, which has proven smaller than initially anticipated.

The decision also aligns with Lido’s broader strategic goals. Recent governance proposals, including GOOSE and reGOOSE, have emphasized a renewed focus on Ethereum, where Lido remains a dominant player in the liquid staking market.‍

Implications for stMATIC Holders

The sunsetting process will occur in stages, impacting users who hold stMATIC tokens. Rewards for stMATIC holders will stop during the sunsetting process. Between January 15 and January 22, 2025, the protocol will pause operations, preventing any withdrawals during this period. Users can unstake their MATIC tokens through the Lido on Polygon frontend until June 16, 2025. After this date, withdrawals will only be possible through blockchain explorer tools.

Lido encourages stMATIC holders to initiate the unstaking process during the six-month transition period to avoid complications. Detailed instructions for unstaking have been provided on the official support page.‍

Key Dates to Note

Lido on Polygon staking will officially discontinue on December 16, 2024, and no new stakes will be accepted. Between January 15 and January 22, 2025, the protocol will temporarily pause and resume operations after this window. By June 16, 2025, frontend support will end, and users will need to rely on blockchain explorers for withdrawals.