Lido Finance Winds Down Polygon Operations Amid Shift in DeFi Landscape and Focus on zkEVM Solutions

The largest liquid staking protocol in decentralized finance (DeFi) is winding down its operations on the Polygon network due to limited user adoption and a strategic refocus on Ethereum.

Decentralized finance (DeFi) liquid staking giant Lido Finance is winding down its operations on the Polygon network. The move comes after a request from Lido DAO Token (LDO) holders, extensive discussions within the DAO forum, and a community vote where 99% of participants favored the proposal.

According to the Lido team, the decision to wind down Lido on Polygon was made due to several factors, including challenges faced by Lido on Polygon, such as resource-intensive maintenance, insufficient rewards, and a shift in the DeFi landscape.

"This transition has led to reduced demand for liquid staking solutions on Polygon PoS, affecting Lido on Polygon’s potential as a foundational DeFi building block," the Lido team stated. "Additionally, alternative liquid staking solutions have been built within an ecosystem that proved smaller than initially anticipated."

The move also comes as part of a broader strategic refocus by Lido on Ethereum, following feedback from the community and LDO holders. The protocol will now concentrate its efforts on the flagship chain and its scaling solutions.

"The decision to wind down Lido on Polygon aligns with feedback from the community and LDO holders, highlighting the importance of user adoption and demand in shaping the protocol's direction," the Lido team added.

As of Dec. 16, Lido dao has discontinued staking requests on Polygon. However, users can still withdraw their staked MATIC through the Lido interface on Polygon until June 16, 2025. All rewards have also been discontinued.

The protocol will temporarily suspend all withdrawals between Jan. 15 and Jan. 22, 2025. By June 16, 2025, front-end support will end, and withdrawals will only be processable through browser tools.

Key dates for stMATIC holders:

According to DefiLlama data, Lido Finance has a total value locked (TVL) of $38 billion as of Dec. 16, making it the largest liquid staking protocol in the DeFi market. Dune Analytics reports Lido holds $45 million in staked tokens on Polygon, while DefiLlama data shows the Polygon network has a TVL of over $1.2 billion.

This isn't the first time Lido has ceased operations on a blockchain. Last year, the protocol discontinued its services on Solana following a community vote and concerns over unsustainable financials and low fees. Lido had launched on Solana on Sept. 8, 2021.

The move by Lido follows a proposal by Aave, a prominent lending protocol on Polygon, to also cease operations on the network due to concerns about an upcoming review of the risk profile of bridged assets. Aave chain founder Marc Zeller launched the proposal on Dec. 13 in response to Polygon’s governance request to use a specific bridging mechanism.