Lido’s wrapped staked ETH (wstETH) is set to make its debut on the BNB Chain, marking a significant milestone for the liquid staking token.
On August 9, the Lido community unanimously approved a proposal to bridge wstETH to BNB Chain, with Wormhole and Axelar providing the canonical bridge. This move follows a strong community demand to enhance cross-chain connectivity and unlock new liquidity.
Lido Community Approves Proposal
The proposal, which saw 50 million LDO tokens cast in favor, was driven by the Lido community’s desire to expand wstETH’s reach. The new cross-chain connection is expected to benefit builders and developers across ecosystems once it goes live. According to an official announcement, the BNB connection will function as a public good, with contracts controlled by the Lido DAO.
Lido Finance’s native token, LDO, saw a brief surge in price following the announcement, climbing from $1.03 to $1.13 before settling at $1.06 for a 2.5% daily gain. Despite this short-term gain, LDO has struggled in recent weeks, down 37% over the past month and 42% in 2024, reflecting broader market trends.
Bridging Technology and Market Impact
This integration represents a pioneering collaboration between Wormhole and Axelar, two competing interoperability protocols. Together, they will facilitate cross-chain transfers of wstETH between Ethereum and BNB Chain. According to Dan Reecer, co-founder of Wormhole Foundation, this is the first collaboration of its kind, starting with a crucial asset like wstETH.
Expanding wstETH to BNB Chain also marks stETH’s first venture onto another Layer 1 blockchain. Previously, wstETH was limited to Ethereum and seven Layer 2 networks, including Arbitrum, Optimism, and Polygon. This expansion is expected to unlock new liquidity and bolster the DeFi ecosystem on BNB Chain, which is currently the fourth-largest DeFi ecosystem with $4.27 billion in total value locked (TVL).
The Significance of Liquid Staking
Liquid staking has become the largest segment in decentralized finance (DeFi), with $42.6 billion locked in protocols. Liquid staking allows users to earn staking rewards while maintaining the flexibility to use their staked assets in DeFi activities. This is achieved by issuing tokens that represent the staked assets, which can be traded or used in various DeFi protocols, bypassing the need to unstake assets manually.
With this expansion, wstETH is poised to tap into the growing DeFi market on BNB Chain, offering users more opportunities to generate yield and participate in the ecosystem.
