Unlocking Lido's Staked Ether: Seamless Integration with Cosmos and IBC Blockchains
Lido, a prominent player in the field of liquid staking solutions, is widely recognized for its staking token, stETH, which presently commands an impressive market capitalization of $13.8 billion.
In a substantial development, Lido, a major figure in the realm of Ethereum staking, has initiated a collaboration with two projects within the Cosmos blockchain ecosystem. The central aim of this partnership is to establish a bridge that facilitates the seamless transfer of Lido's staked ether (stETH) tokens to the Cosmos network. This endeavor holds the potential to enable the fluid movement of a significant volume of liquidity, potentially amounting to millions of dollars, between these two distinct blockchain platforms.
Liquid staking has garnered substantial popularity as a means for investors to yield returns from their digital assets. It has emerged as one of the most prominent sectors within the decentralized finance (DeFi) landscape, accumulating a combined value of $16 billion, as indicated by data from DefiLlama. Platforms such as Lido, specializing in liquid staking, empower users to maintain the liquidity of their locked tokens through derivative tokens that can be leveraged for lending and borrowing.
Lido provides stETH in two variants: a rebasing token, stETH, and a wrapped, auto-compounding token, wstETH. The latter plays a pivotal role in establishing the bridge to Cosmos.
For this cross-platform initiative, Lido has opted to collaborate with Neutron, a cross-chain platform, and Axelar, a full-stack development network. It is worth noting that both Neutron and Axelar have committed 1% of their respective token incentives to enhance liquidity for wrapped stETH and wstETH.
Avril Dutheil, a core contributor to Neutron, expressed enthusiasm for this collaborative venture, emphasizing, "We are excited to be part of the effort to bring one of the biggest liquid staking tokens, Lido’s staked ETH, to the Cosmos ecosystem. It is a testament to the value of cross-chain support and our commitment to increasing liquidity and user engagement within the Cosmos ecosystem."
Once seamlessly integrated into the Cosmos network, the wstETH token will serve a multifaceted purpose across various blockchains operating on Cosmos’ Inter-Blockchain Communication (IBC) technology platform. This expansive network includes prominent names such as Cosmos, Cronos, Sommelier, along with major DeFi protocols like Osmosis and dYdX.