What is Lido?
The Lido protocol is a decentralized finance (DeFi) solution designed to bring liquidity to staked assets on various blockchain networks, primarily focusing on Ethereum. It enables users to stake their Ethereum (ETH) tokens and receive liquid tokens in return, known as "stETH," which represent the staked ETH. This allows users to maintain exposure to ETH's value while also participating in staking rewards, even though their assets are locked in the underlying proof-of-stake (PoS) network.
What is Lido DAO?
Lido DAO operates as a decentralized organization governed by its token holders. The Lido DAO token, LDO, is used for governance and decision-making within the DAO. LDO holders can participate in the DAO's governance by voting on proposals, such as adjusting staking parameters, adding support for new assets, or upgrading the platform's functionality.
What is LDO?
The Lido DAO token, known as LDO, is an ERC-20 token and is the native governance token of the Lido protocol. LDO holders have the power to influence and participate in the decision-making processes of the Lido protocol's development, including voting on proposals, protocol upgrades, fee adjustments, and other important matters. The total supply of LDO tokens is capped at 1 billion tokens.
How does LDO compare to Bitcoin?
First, Bitcoin is a “coin” and LDO is a “token”. Bitcoin powers the Bitcoin blockchain and it is mined by a decentralized network of computers that solve complicated puzzles to verify transactions. By contrast, LDO is a token that runs on the Ethereum blockchain. On Ethereum, ETH is staked to process transactions on the network, including LDO transactions. LDO is what is known as an ERC-20 token, the name applied to the generic token standard for the Ethereum blockchain.
Second, Bitcoin is far larger and older than LDO. While Bitcoin, the largest cryptocurrency by market capitalization, has a market cap of roughly $536 billion, LDO has a market cap of around $1.8 billion (as of May 2023). And, while LDO launched in December 2020, and its development is still in progress, Bitcoin has been around for over a decade.
Finally, LDO’s value is largely tied to the success of the Lido protocol. The LDO token’s governance features will remain relevant so long as the Lido protocol continues to be valued and utilized by the broader crypto community.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about LDO, including an opinion that LDO is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of LDO prior to making it available on Wealthsimple Crypto and has concluded that LDO is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated LDO based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of LDO, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created Lido;
- The supply, demand, maturity, utility and liquidity of LDO;
- Material technical risks associated with LDO, including any code defects, security breaches and other threats concerning LDO and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with LDO, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of LDO.
Like all other crypto assets, there are some general risks to investing in LDO. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure. LDO also presents higher short history risk and its value is tied, in part, to the continued usage of the Lido protocol by the broader cryptocurrency community.
The Lido DAO team and community are not under any legal or regulatory obligation to disclose material information to the public regarding their activities. Holders of LDO have no recourse to the Lido DAO or Wealthsimple if LDO declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading LDO. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc. dated June 18, 2021. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.
Last updated: June 29, 2023