Back to Course

3. Advanced Course

0% Complete
0/0 Steps
  1. 1. What is Taproot?
  2. 2. Blockchain bridges – what are they?
  3. 3. What is the 51% attack on blockchain?
  4. 4. Zero-knowledge proof – a protocol that respects privacy 
  5. 5. What is EOSREX?
  6. 6. Mirror Protocol – what it is? 
  7. 7. What is DAO, and how does it work?
  8. 8. What is spoofing in the cryptocurrency market? 
  9. 9. What is digital property rights in NFT?
  10. 10. How to verify a cryptocurrency project – cryptocurrency tokenomics 
  11. 11. What is Ethereum Plasma?
  12. 12. What is Ethereum Casper?
  13. 13. What is Selfish Mining? 
  14. 14. How to create your own NFT? 
  15. 15. Schnorr signatures - what are they? 
  16. 16. What is Zk-SNARK and Zk-STARK? 
  17. 17. What is Proof of Elapsed Time (PoET)?
  18. 18. MimbleWimble - what is it? 
  19. 19. What are ETFs and what role do they play in the cryptocurrency market? 
  20. 20. What are synthetic assets? 
  21. 21. Definition of DeFi, and what are its liquidations?
  22. 22. New identity system - Polygon ID
  23. 23. What is Ethereum Virtual Machine (EVM) and how does it work?
  24. 24. Ethereum Foundation and the Scroll protocol - what is it?
  25. 25. What is Byzantine fault tolerance in blockchain technology?
  26. 26. Scalability of blockchain technology - what is it?
  27. 27. Interchain Security - new Cosmos (ATOM) protocol
  28. 28. Coin Mixing vs. Coin Join - definition, opportunities, and threats
  29. 29. Soulbound Tokens - what are they, and how do they work?
  30. 30. Definition of LIDO - what is it?
  31. 38. What is Web3 Infura?
  32. 39. Mantle - Ethereum L2 scalability - how does it work?
  33. 40. Polygon zkEVM - everything you need to know
  34. 41. What is Optimism (OP), and how do its roll-ups work?
  35. 42. What are RPC nodes, and how do they work?
  36. 43. SEI Network: everything you need to know about the Tier 1 solution for DeFi
  37. 44. Types of Proof-of-Stake Consensus Mechanisms: DPoS, LPoS and BPoS
  38. 45. Bedrock: the epileptic curve that ensures security!
  39. 46. What is Tendermint, and how does it work?
  40. 47. Pantos: how to solve the problem of token transfer between blockchains?
  41. 48. What is asymmetric encryption?
  42. 49. Base-58 Function in Cryptocurrencies
  43. 50. What Is the Nostr Protocol and How Does It Work?
  44. 51. What Is the XDAI Bridge and How Does It Work?
  45. 52. Solidity vs. Rust: What Are the Differences Between These Programming Languages?
  46. 53. What is a Pinata in Web 3? We explain!
  47. 54. What Is a Real-Time Operating System (RTOS)?
  48. 55. What Is the Ethereum Rinkeby Testnet and How Does It Work?
  49. 56. What Is Probabilistic Encryption?
  50. 57. What Is EIP-4337? Will Ethereum Account Abstraction Change Web3 Forever?
  51. 58. What are smart contract audits? Which companies are involved?
  52. 59. How does the AirGapped wallet work?
  53. 60. What is proto-danksharding (EIP-4844) on Ethereum?
  54. 61. How to Recover Cryptocurrencies Sent to the Wrong Address or Network: A Practical Guide
  55. 62. MPC Wallet and Multilateral Computing: Innovative Technology for Privacy and Security
  56. 63. What is decentralised storage and how does it work?
  57. 64. Quant Network: scalability of the future
  58. 65. What is StarkWare, and recursive validity proofs
Lesson 30 of 58
In Progress

30. Definition of LIDO – what is it?

Proof-of-stake blockchains, which includes Ethereum or Solana, are based on economic staking. Thus, they resign from the computational Proof-of-Work. This is how they complete their transactions and secure the network.

Unfortunately, there is a problem here. Economic staking makes funds illiquid, as they are blocked by validators for this purpose. Today we will discuss the solution to this issue – we will discuss LIDO and learn its definition.

What is LIDO and what is its purpose

LIDO Finance to staking platform, which is a solution to the problem we wrote about in the paragraph above.

LIDO tokenizes funds of platform users into “st-token” assets. They are tied to the underlying asset in a 1:1 ratio (exactly like a tie stablecoin with a dollar). This makes the original funds liquid and usable in the DeFi ecosystem.

The platform was first launched in December 2020. If we connect some important facts, it appeared only a few weeks after it hit the network Beacon Chain. Believe us, this is no accident. LIDO focuses very closely on Ethereum

So, what benefits does it give us LIDO? It mainly solves two problems:

  1. It engages users in the staking process with absolutely any input amount.
  2. Bypasses blocked funds by securing them. 

LIDO – how does it work?

The platform tokenizes Proof-of-stake staking funds, as staked tokens. Then we get the opportunity to use them in the dApps ecosystem. Of course, different networks have different staked tokens. Typically, their names differ by the “st” prefix that is added to the network token. Here are some examples:




Tokens staked are tied to native tokens in a 1:1 ratio. This means that 1 stETH is equal to the value of ETH.

Having already learned the above, you have already noticed that LIDO acts a bit like an intermediary. Utility Tokens we deposit to the platform and in fact stake them on the appropriate PoS networks.

Next LIDO smart contract sets rewards for validators, manages the payout of staked tokens and issues versions of “st” tokens proportionally to the amount deposited. Stacked tokens are a safeguard for us on DeFi dApps.

In summary, the LIDO platform works in four main areas:

  1. Stake – that is, it enables users staking their assets. As a result, they receive valuable rewards. As users, we have the option of staking any number of tokens. The platform does not limit us with any minimum entry.
  2. Mint – when staking on LIDO, we mint staked tokens. As we mentioned, they are issued in a 1:1 ratio. To increase your profits, you can use them throughout the DeFi ecosystem.
  3. DeFi – the platform allows us to use our assets for staking and thus obtain additional profits. The tokens that we earn from staking every day can be additionally used as collateral, a loan, yield farming and many, many more.
  4. Community – LIDO DAO is a community. Its goal is to build staking services and develop LIDO/ The number of DAO users is growing day by day.


LIDO DAO is a platform that deals with services in liquid staking,  mainly for Ethereum. Users earn rewards for staking without locking up their assets. LIDO Liquid Staking Protocol will be the liquid staking protocol on Ethereum 2.0. All users of the platform will be able to deposit their Ether in LIDO smart contracts and will receive their stETH.

Users deposited funds are controlled by DAO. In this ecosystem, node operators will never have direct access to user assets.

“st” tokens are completely free of restrictions. Especially those related to the lack of liquidity. They can be transferred at any time. The “st” token balance is calculated based on the total amount of token staked, plus rewards and minus slashing penalties.


For us LIDO is definitely a better solution than self-staking. Avoids asset freezes and validation node maintenance. Users who stake their tokens can earn from minimal amounts. No deposit limit.It is worth knowing that at the beginning the system charges 10% of prize staking fees. The fees are split between node operators, DAOs and the slashing fund. That’s why the low level of fees makes LIDO even more profitable.