The next token that will be onboarded in @MakerDAO as collateral is... π₯
π§ stETH from @LidoFinance π§
Yeah, Ethereum 2.0 is closer to Maker than ever π₯
And now, your best source of info about Maker and DeFi with memes and GIFs is ready for a new thread π§΅π
1/19
π§ stETH from @LidoFinance π§
Yeah, Ethereum 2.0 is closer to Maker than ever π₯
And now, your best source of info about Maker and DeFi with memes and GIFs is ready for a new thread π§΅π
1/19
An Executive Vote for onboarding $WSTETH as collateral in the Maker Protocol was approved on Oct 26.
The vote breakdown closed at:
π’ 53,674.41 MKR for YES π₯
π The Maker Community has decided. That's how governance works, baby.
2/19
The vote breakdown closed at:
π’ 53,674.41 MKR for YES π₯
π The Maker Community has decided. That's how governance works, baby.
2/19
First of all: What is @LidoFinance and how it works? π€
π Lido is a decentralized service that allows you to participate in staking blockchains without locking assets or maintaining a complicated infrastructure.
π§Ώ It started along with Phase 0 of Ethereum 2.0
3/19
π Lido is a decentralized service that allows you to participate in staking blockchains without locking assets or maintaining a complicated infrastructure.
π§Ώ It started along with Phase 0 of Ethereum 2.0
3/19
π€ You can put your $ETH through Lido's smart contracts into the beacon chain and receive staking rewards from Ethereum 2.0.
βοΈ The beacon chain is the consensus mechanism of Ethereum 2.0, responsible for creating blocks, validate them and rewarding validators with $ETH.
4/19
βοΈ The beacon chain is the consensus mechanism of Ethereum 2.0, responsible for creating blocks, validate them and rewarding validators with $ETH.
4/19
π What a nice! So, you can participate in the consensus of Ethereum 2.0 without needing an entire validator.
π You'll be participating in the creation of new blocks for Eth 2.0.
π You'll be earning $ETH rewards.
π§ But that's not ending here.
5/19
π You'll be participating in the creation of new blocks for Eth 2.0.
π You'll be earning $ETH rewards.
π§ But that's not ending here.
5/19
π When you put your $ETH in Lido you receive $STETH, an ERC20 token that represents the user's staked $ETH balance of beacon chain.
π€ When transactions are enabled on Eth 2.0 everyone will be able to redeem $STETH for their $ETH + their accumulated staking rewards.
6/19
π€ When transactions are enabled on Eth 2.0 everyone will be able to redeem $STETH for their $ETH + their accumulated staking rewards.
6/19
πͺ $STETH is a token like any ERC20.
π€© While your $ETH staked directly to a beacon chain validator is fully locked, your $ETH staked with Lido give you $STETH back that you can use across all DeFi ecosystem to trade and earn more yield (or issue Dai with Maker π).
7/19
π€© While your $ETH staked directly to a beacon chain validator is fully locked, your $ETH staked with Lido give you $STETH back that you can use across all DeFi ecosystem to trade and earn more yield (or issue Dai with Maker π).
7/19
π Another advantage from Lido is that you don't necessarily need to stake a minimum of 32 $ETH
π Remember that's the minimum $ETH needed to staking in Eth 2.0 directly in the beacon chain contract
π€ But with Lido there's no minimum! You can stake any amount of $ETH
8/19
π Remember that's the minimum $ETH needed to staking in Eth 2.0 directly in the beacon chain contract
π€ But with Lido there's no minimum! You can stake any amount of $ETH
8/19
βοΈ Lido made it possible distributing those random amounts of deposited $ETH in chunks of 32 $ETH and using them between all active node operators in the beacon chain.
It's teamwork, bro π
9/19
It's teamwork, bro π
9/19
βοΈ Technically speaking, @LidoFinance is composed by 3 structural components: the staking pool, the $STETH token and the DAO.
π Below the staking pool, the node operators are responsible of plugging the $ETH into the Eth 2.0 main staking contract.
10/19
π Below the staking pool, the node operators are responsible of plugging the $ETH into the Eth 2.0 main staking contract.
10/19
π Lido will maintain a set of node operators who are responsible for validating the $ETH staked with Lido.
π³οΈ The addition and removal of node operators will be voted on by Lido community governance.
11/19
π³οΈ The addition and removal of node operators will be voted on by Lido community governance.
11/19
π Node operators are selected by the DAO to run Eth 2.0 full validators
π¦ When an user deposits $ETH, the same amount of $STETH is minted
π The node operators receive the chunks of 32 $ETH to deposit it directly to the beacon chain and that's how the core system works
12/19
π¦ When an user deposits $ETH, the same amount of $STETH is minted
π The node operators receive the chunks of 32 $ETH to deposit it directly to the beacon chain and that's how the core system works
12/19
π» The staking pool is the core smart contract of Lido.
βοΈ It's responsible for $ETH deposits and withdrawals; minting and burning $STETH tokens, delegating funds to node operators, applying fees to staking rewards and accepting updates from the oracle.
13/19
βοΈ It's responsible for $ETH deposits and withdrawals; minting and burning $STETH tokens, delegating funds to node operators, applying fees to staking rewards and accepting updates from the oracle.
13/19
π Oracles keeps track of balances of the DAO's validators on the beacon chain.
π These balances are dynamic because of reward accumulation and slashing and staking penalties.
14/19
π These balances are dynamic because of reward accumulation and slashing and staking penalties.
14/19
π€ When there are rewards, a small amount of $STETH are minted to the node operators and to the DAO's insurance and development fund, representing a reward fee.
15/19
15/19
π The whole system is controlled by a DAO that works with decentralized governance through the $LDO as the governance token.
π³οΈ By holding $LDO tokens, one is granted voting rights within the Lido DAO.
16/19
π³οΈ By holding $LDO tokens, one is granted voting rights within the Lido DAO.
16/19
π€ Now, what's the difference between $STETH and $WSTETH?
π± $WSTETH is an ERC20 token that represents the account's share of the total supply of $STETH tokens.
17/19
π± $WSTETH is an ERC20 token that represents the account's share of the total supply of $STETH tokens.
17/19
ππ $WSTETH token's balance only changes on transfers, unlike $STETH that is also changed when oracles report rewards and penalties.
π Lido calls it a "power user" token for DeFi which doesn't support rebasable tokens. That's why $WSTETH is the selected token for Maker
18/19
π Lido calls it a "power user" token for DeFi which doesn't support rebasable tokens. That's why $WSTETH is the selected token for Maker
18/19
So, what's your $ETH doing? Just static, or earning double-rewards?
It's easy:
π€ Stake your $ETH in @LidoFinance and earn staking rewards.
π€ Wrap your received $STETH into $WSTETH
π€ Use your $WSTETH for minting DAI and let's earn more through DeFi.
It's easy:
π€ Stake your $ETH in @LidoFinance and earn staking rewards.
π€ Wrap your received $STETH into $WSTETH
π€ Use your $WSTETH for minting DAI and let's earn more through DeFi.
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