The decentralized staking protocol Lido has unveiled an ambitious plan to extend its reach across multiple Ethereum Layer 2 (L2) networks, marking a significant step toward broader scalability and accessibility in the DeFi ecosystem. According to a recent blog post published by the Lido development team, the move aims to bring wrapped liquid staking derivatives—specifically wstETH—to leading L2 solutions, enhancing capital efficiency and user experience beyond the Ethereum mainnet.
This expansion underscores Lido’s commitment to becoming a truly network-agnostic protocol, enabling users to participate in Ethereum consensus security from any major Layer 2 platform with minimal friction and cost.
Bridging Liquid Staking to Layer 2
Lido has long been a dominant force in the liquid staking space, allowing users to stake their ETH and receive stETH in return—a token that represents their staked position and accrues yield over time through beacon chain rewards. Unlike traditional staking, which locks up assets, stETH can be freely used across various DeFi platforms, enabling yield stacking and improved liquidity.
Now, Lido is taking this model further by introducing wstETH, a wrapped, non-rebasing version of stETH designed specifically for cross-chain and Layer 2 compatibility. While stETH periodically adjusts its balance via rebasing (increasing token holdings automatically), wstETH maintains a stable balance while increasing in value—making it more predictable and easier to integrate into external protocols.
👉 Discover how liquid staking is reshaping DeFi on Ethereum’s Layer 2 networks.
The initial rollout will support two of the most widely adopted Optimistic Rollups: Optimism and Arbitrum. These platforms already host a significant portion of Ethereum’s DeFi activity, and integrating wstETH will allow users to leverage staked ETH derivatives directly within L2-based lending markets, DEXs, and yield strategies.
Additionally, Lido is extending integration through Argent, targeting ZK-Rollup ecosystems such as Aztec and zkSync. This strategic partnership enables privacy-preserving transactions and scalable smart contract execution while still allowing users to maintain exposure to staked ETH yields.
A Network-Agnostic Vision for Decentralized Staking
At the heart of Lido’s expansion strategy is the principle of being “network-agnostic.” The protocol does not aim to be confined to Ethereum alone but seeks to serve as a foundational layer for liquid staking across all chains demonstrating meaningful economic activity.
By deploying wstETH first on L2s, Lido ensures that users can protect Ethereum’s network security without bearing high gas fees or congestion associated with the mainnet. The ultimate goal? To make securing the Ethereum blockchain accessible, affordable, and efficient—no matter where users operate within the broader ecosystem.
Future plans include supporting re-staked versions of stETH directly on Layer 2s, further deepening interoperability and enabling new forms of composability between staking rewards and decentralized applications.
Addressing Centralization Concerns in Ethereum Staking
Despite its growing popularity, Lido has faced scrutiny over its centralizing influence on Ethereum’s validator set. With over 31% of all staked ETH flowing through the protocol, concerns have emerged about potential risks to network decentralization and governance concentration.
In response, the Lido DAO has actively explored structural reforms to enhance decentralization. Notably, it recently rejected a proposal that would cap its market share—a decision reflecting confidence in its ability to self-regulate while maintaining open access.
However, the team acknowledges the need for stronger safeguards. To mitigate conflicts of interest between stETH holders (who benefit from yield and liquidity) and LDO token holders (who govern the protocol), Lido is considering innovative governance models that better align incentives across stakeholders.
These efforts are critical as Ethereum evolves into a more modular and distributed architecture. Ensuring that no single entity—or protocol—gains disproportionate control remains central to preserving the network’s long-term resilience.
LDO Token Surges Amid Expansion Momentum
Market sentiment around Lido has turned sharply positive following the announcement. The LDO governance token saw a surge of over 170% in the past seven days, briefly reaching a high of $1.81 before settling around $1.42 at the time of writing—an 118% weekly gain despite a 17% pullback from peak levels.
With a current market cap of approximately $454 million** and a 24-hour trading volume exceeding **$121 million, LDO ranks among the top 100 cryptocurrencies by market capitalization. It currently holds position #80 on major tracking platforms, just behind Convex Finance (CVX) and ahead of TerraClassicUSD (USTC).
The spike in trading activity reflects investor confidence in Lido’s strategic direction, particularly its Layer 2 ambitions and ongoing efforts to balance growth with decentralization.
👉 Explore how next-gen staking protocols are driving crypto market momentum.
Frequently Asked Questions (FAQ)
What is wstETH?
wstETH is a wrapped version of stETH that does not undergo rebasing. Instead of increasing your token balance over time, wstETH maintains a fixed amount while appreciating in value relative to ETH. This makes it more compatible with DeFi applications on Layer 2 networks and simplifies accounting for developers and users alike.
Why is Lido expanding to Layer 2 networks?
Lido is expanding to reduce reliance on the Ethereum mainnet for staking interactions, lower transaction costs, improve user experience, and increase adoption of liquid staking derivatives across scalable environments. By bringing wstETH to L2s like Arbitrum and Optimism, Lido enhances capital efficiency throughout the Ethereum ecosystem.
Is Lido too centralized?
While Lido controls over 31% of staked ETH—a figure that raises valid decentralization concerns—the protocol is actively working on governance improvements and risk mitigation strategies. Its DAO structure allows community-driven decisions, and ongoing upgrades aim to distribute influence more evenly among participants.
How does wstETH differ from stETH?
stETH rebases: your balance increases gradually as rewards accrue. wstETH does not rebalance; instead, its price increases relative to ETH. For example, 1 wstETH may start at $3,000 but rise to $3,100 as staking rewards accumulate. This pricing mechanism is preferred by many DeFi protocols for stability and predictability.
Can I use wstETH for yield farming?
Yes. Once bridged to supported Layer 2 networks like Arbitrum or Optimism, wstETH can be used in various DeFi protocols for lending, borrowing, liquidity provision, and yield farming strategies—just like other ERC-20 tokens.
Will other networks be supported in the future?
Absolutely. While initial focus is on Optimism, Arbitrum, Aztec, and zkSync, Lido’s vision is network-agnostic. Future integrations may include other EVM-compatible chains, alternative rollups, and even non-Ethereum ecosystems showing strong proof-of-stake economic activity.
The Road Ahead for Liquid Staking
As Ethereum continues scaling through Layer 2 innovations, protocols like Lido play a pivotal role in connecting staking economics with decentralized finance. The introduction of wstETH across multiple rollups isn’t just a technical upgrade—it’s a foundational shift toward a more inclusive, efficient, and composable Web3 economy.
With strong market momentum, active governance participation, and clear product vision, Lido is positioning itself not only as a leader in liquid staking but as a core infrastructure layer for the next phase of Ethereum’s evolution.