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Locked and Lost: Over $21 Million in Solana Stuck in Lido’s DeFi Protocol


The community is in turmoil as over $21 million in Solana (SOL) remains locked within Lido’s staking protocol.

This situation has spotlighted the potential risks within decentralized finance (DeFi) systems.

Why Users Are Unable to Withdraw Solana From Lido’s Staking Protocol

Lido, a major player in the DeFi sector, enables users to stake their digital assets in exchange for placeholder tokens. These tokens can be used across different DeFi platforms.

While the broader Lido ecosystem amasses over $31 billion in total value locked (TVL), its Solana service trailed behind competitors like Marinade and Jito.

Finally, in October, Lido announced the discontinuation of its Solana service, leading to the removal of its stSOL and SOL exchange interface. Lido formally ceased support on February 4, yet 112,923.29 SOL remains locked, affecting 31,585 users, according to Solscan data.

As per the current market price, the valuation of locked Solana is approximately $21 million.

“Whilst this decision was difficult in the face of numerous strong relationships across the Solana ecosystem, it was deemed a necessity for the continued success of the broader Lido protocol ecosystem,” Lido justified the discontinuation.

Lido Staked Solana (SOL)
Lido Staked Solana (SOL). Source: Solscan

Complicating matters, a bug in Lido’s smart contracts has emerged, hindering users from withdrawing their investments. This flaw, coupled with the end of the user-friendly interface, has forced stakeholders to interact directly with the code, a move fraught with challenges, especially for those with limited technical knowledge.

The transition from a web interface to code-based interactions has elevated the risk of errors and left many investors stranded. Within Lido’s community channels, there’s vocal criticism about the disorder and perceived neglect faced by stSOL holders.

“The Solana channel of the Lido Discord is a mess. stSOL holders trying to unstake completely lost and abandoned. I know stSOL is depreciated, but I don’t think this is the right way to treat users,” a pseudonymous X user wrote.

Despite Lido’s retreat from Solana, the network’s DeFi presence remains strong. Platforms like Marinade Finance and Jito continue to show significant staked assets.

Solana’s DeFi influence has surged, now holding the fourth-largest spot based on TVL, bolstered by a 61% increase over the last month.

Top crypto platforms | April 2024




Conclusion

In conclusion, the situation surrounding the locked funds in Lido’s staking protocol has brought to light the risks associated with decentralized finance (DeFi) systems. The discontinuation of Lido’s Solana service has left over $21 million in SOL inaccessible to 31,585 users. A bug in Lido’s smart contracts has further complicated the situation, preventing users from withdrawing their investments. The transition to code-based interactions has increased the risk of errors and left many investors stranded. Despite these challenges, Solana’s DeFi ecosystem continues to thrive, demonstrating resilience and growth in the face of adversity. Overall, this event underscores the importance of robust security measures and user-friendly interfaces in the DeFi space.

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