Hasu, strategic advisor to Lido, and Tarun Chitra, founder of Gauntlet, explain everything about staked ETH, aka stETH, how it should be priced, Lido’s market dominance, and much more. Show highlights:

the role of Lido, what stETH is, and what its benefits are
whether Ethereum’s lack of delegated proof of stake contributes to the need for stETH
why stETH is not mispriced and why it doesn’t necessarily have to be worth 1 ETH
the inherent risks associated with stETH
how there was not enough liquidity to handle all the liquidations, especially in automated vaults on, for instance, Instadapp
how automated market makers work and what Curve’s amplification factor is
whether 3AC and Celsius had a significant impact on the stETH/ETH “de-peg”
how does the Merge affect the liquidity of stETH
Hasu’s and Tarun’s level of confidence that the Merge will happen this year and whether it will be a success
what will happen to the price of stETH after the redemptions are enabled
why Lido has achieved such a level of dominance
how Lido decreases the cost of staking and helps improve the security of the Ethereum blockchain
whether there is going to be a “winner take all” in the liquid staking derivatives market
how liquidity fragmentation can cause the system to blow up
why LDO tokenholders might not have the same incentives as ETH tokenholders
what is Lido’s new dual governance model and what is it trying to achieve
whether Lido should self limit its market dominance
how Lido coordinates validators and the role of the LDO token in this coordination
what are the lessons to be learned from the stETH situation
how governance is a liability to DeFi protocols

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EPISODE LINKS

Hasu:

Tarun:

Twitter: https://twitter.com/tarunchitra

stETH

Lido’s explanation: https://twitter.com/LidoFinance/status/1535184472546889735?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
Lido’s explanation #2: https://twitter.com/LidoFinance/status/1536756933054676992?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
Hasu’s thread #1: https://twitter.com/hasufl/status/1524717773959700481?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
Hasu’s thread #2: https://twitter.com/hasufl/status/1525427069198508033?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
Tarun’s take: https://twitter.com/tarunchitra/status/1538775828573609985?s=20&t=oQeB1uj7HG7Y4he-0gbcLg
Tarun’s paper: Why Stake when you can borrow: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3629988

Lido

Self-limit?: https://twitter.com/LidoFinance/status/1540258690942615555?s=20&t=sJU5C5xo5litEJrZZDaWNQ
Hasu on Lido’s dual governance proposal: https://twitter.com/hasufl/status/1540652075352313857?s=20&t=sJU5C5xo5litEJrZZDaWNQ
Lido’s two phase voting scheme :https://blog.lido.fi/moving-to-two-phase-voting/
Previous Unchained Coverage on DAO governance: Solend and Bancor Drama: Did These DAOs Violate the Ethos of Crypto?: https://unchainedpodcast.com/solend-and-bancor-drama-did-these-daos-violate-the-ethos-of-crypto-ep-366/

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