Lido stops support for the Polygon blockchain: focus on Ethereum!

Lido, a well known liquid staking protocol with a TVL of 39.3 billion {dollars}, has simply introduced the sundown of its operations on Polygon.

The group of the mission has voted for a gradual elimination of the chain, which is able to see the exit from the cryptographic service on June 16, 2025.

Users have till that day to withdraw funds on Lido deposited by way of Polygon Pos. The focus of operations will now shift to Ethereum and its L2.

All the particulars beneath.

Lido broadcasts service interruption for the Polygon community

Lido, the main protocol in the liquid staking sector, has initiated the gradual phase-out of its staking providers for the Polygon PoS community.

The powerful resolution got here after the DAO group gathered and voted in favor of stopping operations for the chain in query.

After its preliminary implementation on Lido in 2021, underneath the proposal by Shard Labs that had launched liquid staking of MATIC tokens, the period of sundown arrives.

The protocol interrupted the Polygon staking service already yesterday and notified customers of the definitive interruption on June 16, 2025. 

As said in the official announcement, after this date customers will solely be capable to withdraw from Lido utilizing the applicable explorer instruments.

As talked about, since December 16, staking on the Polygon community by way of Lido has been suspended, with the person interface not accepting new requests.

From right here, a transition interval of about 6 months will observe throughout which customers might want to take steps to withdraw their funds via the dApp interface.

Between January 15 and 22, 2025, the protocol will bear a short lived suspension of providers, throughout which withdrawals can’t be processed.

Finally, on June 16, 2025, front-end support will finish, and withdrawals will solely be doable via browser instruments (immediately from the contract).

The Lido crew recommends finishing the unstake of stMATIC earlier than the established date to facilitate the person expertise.

We remind you that for the unstake of the useful resource, an unlock time of about 9 days is predicted.

The causes for Lido’s abandonment

The resolution to stop its operations on the Polygon PoS blockchain got here after in depth discussions by the Lido group via the DAO discussion board.

According to the individuals of the protocol governance, person adoption for Lido providers on Polygon has been decrease than anticipated.

Furthermore, the rewards generated had been decrease than the bills for sustaining the support and didn’t justify its continuation.

It can be value highlighting the lack of scalability of the chain, which has led Lido to reassess its multichain trajectory.

Now the largest DeFi utility for TVL will focus extra on Ethereum and its related networks akin to layer-2 and rollups.

This is what was said verbatim by the Lido group, which cites a mix of things in the resolution to finish support for Polygon:

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

Polygon Pos at present represents the fifth community for capital locked on Lido, behind BNB Chain, Base, Arbitrum, and Ethereum.

The improve in holdings in wstETH on Polygon, which has doubled its TVL in the final 12 months, was not ample to make sure the continuation of the service.

The chain has not been capable of sustain with the sturdy progress of blockchain rivals like Mantle, Linea, Scroll, Op Mainnet, ZKsync, and others.

We keep in mind that final 12 months, Lido had deserted the blockchain of Solana for comparable causes, provided that the losses of 484,000 {dollars} exceed its revenues at 220,000 {dollars}

At the toes of a doubtlessly disruptive Polygon group proposal: Aave steps ahead and threatens to exit

The sundown on Lido comes at a fragile second for Polygon, whereas the market lender Aave has acquired a proposal to additionally withdraw its providers from the chain.

A gaggle of collaborators on Aave, which additionally represents the dApps on Polygon with the most TVL, has cited sturdy considerations a few DAO proposal that goals to make use of the bridged stablecoins of the chain for yield era.

A couple of days in the past, in reality, some members of the Polygon DAO had offered the thought of aggressively leveraging the unproductive liquidity of the chain.

This transfer, which incorporates the participation of the Yearn, Morpho, and Allez protocols, might generate an annual yield of 70 million {dollars}.

Although it is a sturdy incentive for the Polygon ecosystem and its customers, it’s plain that the use of the bridge reserves can result in severe safety gaps.

Using 1.3 billion {dollars} in collateral stablecoin, there’s a danger of jeopardizing not solely the funds of the Polygon group, however these of the whole DeFi panorama.

In reality, on this manner Polygon would improve its dependence on third events, introducing a systemic danger of exploit.

Aave, sensing the doubtlessly damaging results of the proposal, has taken precautions by stating that it’s going to go away Polygon whether it is truly carried out.

For the second we solely have a Pre-PIP, which goals to collect suggestions in preparation for a real “Polygon Improvement Proposal.”

It may be very seemingly that this technique is not going to be taken severely by the group, contemplating the capital flight it might generate.

User X “Blackie” highlighted how this proposal is “irresponsible and dangerous”.