Ethereum liquid staking protocol Lido announced on July 11 that it will reduce its contributor teams by 15% to secure long-term sustainability.
The decision, communicated by co-founder Vasiliy Shapovalov on X(Twitter), affects staff across Lido Labs, Lido Ecosystem and Lido Alliance. Company leaders say the move is driven by cost control rather than performance issues.
Decision and Rationale
In a public statement, Shapovalov explained that the layoffs are part of a plan to reinforce Lido’s foundation for decades to come.
He thanked those impacted for their work and urged companies looking to hire experienced blockchain talent to contact Lido recruiter Max Pavier on Telegram.
Shapovalov stressed that the choice was not a reflection on the quality of the team members. Instead, he said, it was about aligning operating costs with the long-term interests of LDO tokenholders.
Protocol Background
Lido launched in 2020 to address an issue Ethereum stakers needed to solve: liquid staked ETH. With Lido, Ethereum stakers were able to retain liquidity on their ETH through tokenised staking receipts.
In February, Lido launched version 3, which included modular smart contracts stVaults. These smart contracts allow users to design sophisticated staking plans with custom-tailored staking strategies to manage yield more effectively, thus providing advanced yield management and more flexibility.
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Lido currently stands as the second-largest liquid staking protocol by total value locked. The platform has over $31 billion in staked assets according to DeFiLlama data.
It also earns around $90 million in annualised revenue from staking fees. These figures highlight the growth of liquid staking as a subsector of decentralised finance.
Security Incident Response
Earlier this year, Lido had a possible security issue when one of its oracle keys was compromised over the weekend. The key managed by validator operator Chorus One provided critical off-chain data for the protocol.
Lido’s team response helped neutralise the threat and rotate the key that was compromised. The swift response helped secure potential conflicts of protocols and safeguard users’ funds.
The layoff announcement comes during a more widespread increase that’s happening in the cryptocurrency markets. Many cryptocurrency companies have been hiring during this period of digital asset price increases.
Lido’s leaders, however, decided to take a more cautious path. They believe trimming excess costs today will allow preserving the operational runway and sustain during future downturns.
Community and Industry Reaction
As far as the comments of industry observers go, they have been mixed. Some applauded Lido for communicating their focus on efficiency, as well as celebrating their operational scales.
Other forum members have expressed concerns more generally, highlighting the problem of talent loss in an area with few actively skilled developers. Lido’s success hinges on its ability to innovate, which community members have expressed with both support and concern.
With the current staffing changes implemented, Lido will focus on product development and ecosystem expansion.
The team is now actively working to implement additional features for stVaults and to form partnerships with other Defi ecosystem projects. Governance proposals will also be submitted so that actively engaged token holders can suggest the future directions for the protocol.
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