Wednesday, February 19, 2025

Lido Enables Direct ETH Staking on Layer 2 Networks via Chainlink CCIP

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KEY TAKEAWAYS

  • Users can now stake Ethereum directly on Layer 2 networks using Chainlink’s Cross-Chain Interoperability Protocol.
  • Lido’s Direct Staking rails simplify the staking process, reducing it to a single transaction on L2 networks.
  • Chainlink CCIP enhances cross-chain staking with its Programmable Token Transfers, improving liquidity and security.
  • DeFi platforms like XSwap and OpenOcean are adopting this streamlined staking method.

Users can now stake their Ethereum (ETH) directly on Layer 2 (L2) networks and receive wrapped staked ETH (wstETH), thanks to the integration of Chainlink’s Cross-Chain Interoperability Protocol (CCIP). This development, announced here, marks a significant step in enhancing the accessibility and liquidity of wstETH across the multi-chain economy.

Lido’s new Direct Staking rails, powered by CCIP, allow users to stake ETH directly from other blockchain networks, starting with support for Arbitrum, Base, and Optimism. The peripheral smart contract utilizes CCIP’s Programmable Token Transfer functionality to simplify the process of transferring and staking ETH on Ethereum, thus increasing the accessibility of wstETH.

Streamlined Staking Process

Previously, users holding ETH on L2 networks faced challenges in minting wstETH due to the need to bridge their ETH back to Ethereum mainnet. This process could take up to seven days and involved multiple steps, including swapping ETH for wstETH on an exchange, incurring slippage, or manually bridging assets.

The new Direct Staking rails compress these steps into a single L2 transaction, offering multiple methods of staking ETH depending on user preferences for cost and speed. This innovation is being adopted by various decentralized finance (DeFi) platforms, including XSwap, OpenOcean, and Interport.

The creation of Direct Staking rails required a robust cross-chain interoperability solution. Chainlink CCIP’s Programmable Token Transfers enable not only the transfer of tokens across chains but also the execution of instructions upon arrival. This capability allows users to stake ETH from L2 networks and receive wstETH in a single transaction.

Lido selected Chainlink CCIP for its defense-in-depth security and proven track record in securing billions of dollars in on-chain transactions. The protocol’s level-5 cross-chain security and Risk Management Network provide additional layers of protection, supporting a secure and scalable cross-chain DeFi ecosystem.

In addition to CCIP, Lido’s Direct Staking leverages Chainlink’s data and compute services. Chainlink Data Feeds provide accurate wstETH exchange rates, while Chainlink Automation manages liquidity by batching cross-chain ETH transfers.

Jakov Buratović, Master of DeFi at Lido, stated, “With Chainlink CCIP’s Programmable Token Transfers, Lido’s Direct Staking simplifies staking across Layer 2 networks, improving liquidity for wstETH and enhancing cross-chain interoperability.” Johann Eid, Chief Business Officer at Chainlink Labs, added, “It’s great to see Chainlink CCIP’s Programmable Token Transfers unlocking a one-step connection to staking for Lido on Arbitrum, Base, and Optimism.”


Disclaimer: The views expressed in this article are those of the authors and do not necessarily reflect the official policy of CoinsHolder. Content, including that generated with the help of AI, is for informational purposes only and is not intended as legal, financial, or professional advice. Readers should do their research before taking any actions related to the company and carry full responsibility for their decisions.
Neel Kapoor
Neel Kapoor
Neel Kapoor is a dedicated cryptocurrency enthusiast and blockchain expert at Coinsholder.com. With over a decade of experience, Neel offers insightful analysis and commentary on the latest trends and innovations in the crypto space. His clear and concise writing makes complex topics accessible to all readers.

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