DeFi platform Lido on Friday proposed a limit on the platform’s share of staked Ethereum, citing a potential systematic risk from the token, among other factors.
In a governance proposal put forward on Friday, the fifth-largest DeFi protocol said that multiple prominent Ethereum developers, including co-founder Vitalik Buterin, have argued that no single protocol should have a majority in staking ETH.
Voting on the proposal has not opened yet. Lido wants to first establish whether a limit on staking would be desirable, and to what extent the limit should be placed.
The proposal comes a few weeks after a sharp fall in Lido Staked Ethereum (stETH) caused mass liquidations in the market. The fall caused a divergence in stETH and ETH prices, which could complicate the upcoming merge.
Lido is by far the biggest provider of liquid staked Ethereum, which is a tradeable class of token that represents staked ETH. stETH- its main product- can be redeemed for ETH once the merge goes live.
