Lido Finance, a liquid staking protocol recently had a safety feature kick in as a result of a major influx of ETH tokens.
Staking Rate Limit Kicked In
According to information from Lido Finance, the name of the particular feature is “staking rate limit”. The purpose of the feature is to protect the protocol from harmful activities.
The particular feature gets triggered automatically just as the protocol recognizes a great influx of tokens for staking in a single attempt or a day.
The information shared by the officials at Lido Finance has revealed that over 150,000 ETH tokens were deposited into the staking protocol in a single attempt.
The massive deposit is what auto-triggered the staking rate limit feature.
Lido’s Liquid Staking Feature
Lido Finance is among the most popular and adopted liquid staking protocols. It has been providing staking services for digital assets for a while.
While interacting with the platform, the users gain the opportunity of staking ETH on the protocols. The best part is that the users do not have to lock the ETH in their possession.
As the users interact with the particular feature, they have the ability to stake the ETH in their possession. However, the users do not have to lock the ETH, instead, they can use them whenever they want.
When a user transfers funds into the Lido Finance protocol for the purpose of staking them, they are issued with a variant of ETH.
The variant represents the ETH token but in the staking environment. The particular ETH token has been dubbed as “staked Ether – stETH”.
With the staked downs in the pool, the users have the chance of earning big staking rewards for as long as their tokens are there in the protocol.
The best thing about the Lido Finance protocol is that the users get to make profits on a daily basis and the same can be said for rewards.
Lido Finance Addressed the Matter
It was on February 25, when a tweet was made by the Lido Financial official about the particular event. They confirmed that it is not a common occurrence for protocol safety to get initiated.
They have set the daily deposit/staking limit for ETH to 150,000 for a reason. As per their data analysis, there are not that many staked deposited into their pool on a regular basis.
This was a unique occurrence so they refer it to an event where a huge deposit was made that was exactly the same as their daily staking limit.
Just as the limit was reached, the protocol had the staking feature get triggered automatically. It wanted to protect the protocol from any kind of threats or exploits.
It is a dynamic mechanism that is in place to protect the protocol from getting exploited or hacked by cybercriminals/hackers.
The feature is in place to ensure no negative activity ends up taking place that can potentially harm the system and its investments.
This goes to show that the Lido Finance protocol only lets 150k ETH get passed through their staking protocol once 24-hours. If someone attempts to add more tokens than 150k, then they would be barred from doing that.
They further added that the replenishment of the depositing capacity also gets replenished an hourly interval. The capacity replenishment is for 6,200 ETH on an hourly basis.
Findings Shared by Lookonchain
A very prominent on-chain analyst, known for having an eagle eye sharing his findings about the transfer.
Lookonchain reportedly shared a screenshot where he talked about the possible identity of the person who transferred the huge batch.
After providing information from his end, Lookonchain claimed that the person who deposited the large batch of ETH was Justin Sun, founder of Tron blockchain.
As of now, the Liquid Finance protocol has over $8.9 billion worth of ETH staked on the protocol. At the beginning of January 2023, the staked ETH value was $5.8 billion.
