As announced, in a March blog post by a pseudonymous project developer, Lido Finance, the leading liquid-staking platform in the industry, is poised to withdraw all staking services for both Polkadot (DOT) and Kusama (KSM), on August 1.

The CPO of MixBytes, the development team behind the service, in a Lido proposal, pointed to “several challenges, including market conditions, protocol growth, limited capacity, and priority alignment” as well as “unmet financial expectations” as part of the rationale behind the decision. 

When the original blog post was published, there was approximately $4 million worth of DOT, and just $75,000 worth of KSM staked via Lido.

Lido ceased to accept KSM and DOT deposits on March 15. 

Reward issuance was then halted on June 15, with automatic unstaking and enforced unbonding implemented on June 22.

The final stage of the process is to axe Polkadot and Kusama services altogether, which is set to take place tomorrow, on August 1.

What Does This Mean for $DOT and $KSM?

Polkadot and Kusama, though linked, are each their own independent ecosystem, and therefore will be technically untouched by the withdrawal of Lido’s services.

Though announcements claim support for the DOT and KSM ecosystems, Lido’s decision seems to indicate a distinct lack of confidence in the success of these networks and their growth viability going forward. 

According to MixBytes’ CPO, “We continue to believe in and support Polkadot’s potential as a blockchain network and remain dedicated to pursuing development and contributing to the ecosystem.”

With many of Polkadot’s parachain leases set to expire before the end of the calendar year, some analysts are concerned that those who locked their DOT, some two years ago, to participate in Polkadot’s parachain slot auctions, will look to sell their unlocked tokens, causing significant downward pressure on DOT’s price. 

What is Lido Finance?

Launched at the end of 2020, Lido Finance is the defi protocol that pioneered the liquid staking landscape. Users are able to stake assets, predominantly ETH, via a select handful of trusted staking partners, and receive functional st-tokens in exchange.

These st-tokens can be put to use elsewhere in the defi ecosystem, such as providing liquidity to decentralized exchanges, or acting as collateral for lending and borrowing applications.

At time of writing, Lido has a total-value locked of close to $15 billion, with nearly all of that TVL granted by Ethereum deposits, according to data from DefiLlama. Lido’s native governance token, LDO, currently has a market capitalization of $1.67 billion, according to data from CoinMarketCap.