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In a strategic move to strengthen its position in the Ethereum staking market, Lido, the leading liquid ETH staking protocol, announced a proposal to create a new restoking architecture centered on its stETH token.

The proposal was published on May 13 by Steakhouse Financial, a financial consulting firm specializing in web3.

The proposal, which suggests the formation of the Lido Alliance, aims to promote Ethereum-aligned projects through a “partnership and endorsement framework.” The alliance will focus on developing infrastructure around Lido’s liquid staking token (LST), stETH.

Steakhouse Financial outlined three types of protocols the alliance seeks to promote: new projects offering restoking architecture, building restoking tokens (LRTs), and developing active delegation services (AVSs).

The creation of the Lido Alliance seeks to identify and recognize projects that share the same values ​​and mission, contributing positively to the stETH ecosystem.

“Growing an Ethereum-aligned ecosystem around stETH helps decentralize the network,” the proposal states.

If approved, Lido will form a working group responsible for evaluating potential members, assisting existing members, and removing those who violate the principles of alignment with Ethereum or stETH. Alliance membership and operations will be governed by LDO token holders.

Read and restocking

The proposal comes at a critical time. After all, Lido faces stiff competition from liquid restoring token (LRT) protocols and EigenLayer for market share in Ethereum staking.

Restaking allows users to earn additional yield on Ethereum staking rewards by delegating staked assets to validate third-party AVSs deployed on EigenLayer, currently the main Ethereum restoking protocol.

stETH currently represents 28.7% of the staked ETH supply, down from a peak of 32.5% in September. Despite this, Lido is still the largest DeFi protocol, with a total value locked (TVL) of $27.4 billion. Next comes EigenLayer with around $14.5 billion, according to DeFi Llama.

Staking de Ethereum

On May 10, Hasu, Lido’s strategic advisor, also presented a governance proposal seeking to formalize Lido’s position regarding restoking.

The proposal aims to assert that stETH should remain an LST token and not migrate to an LRT, establish stETH as the primary collateral asset used in restoking, and support “Ethereum-aligned validator services.”

“The staking market is dominated by network effects, leading to a winner-takes-most dynamic,” said Hasu. “Lido must react to changes.”

With this proposal, Lido aims to consolidate its leadership and continue innovating in the Ethereum staking market. At the same time, it promotes the decentralization and security of the Ethereum network.

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